URMILA AND COMPANYPRIVATE LIMITED v. J. M. BAXI AND COMPANY
1985-10-04
G.R.LUTHRA
body1985
DigiLaw.ai
G. R. LUTHRA ( 1 ) THE present application under O. 39, Rr. 1 and 2 read with S. 151 Civil Procedure Code is for issue of an interim injunction restraining the defendant from proceeding with or undertaking the contract for lifting the over- dimensional heavy equipment from Kandla to Guna (M. P.) for Vijaipur Fertilizer Project (hereinafter referred to as the Project ) for the National Fertilizer Limited (hereinafter referred to as NFL) in any manner other than on a joint, equal and consortium basis with the plaintiff. ( 2 ) THE application was filed along with Suit No. 710/85 which was filed by the plaintiff M/s. Urmila and Co. Pvt. Ltd. against the defendant M/s. J. M. Baxi and Co. The suit is for grant of a decree for specific performance of an alleged contract and also for issue of a perpetual injunction on the same lines as the temporary injunction which is being prayed for in the application. The plaintiff is a private limited company registered under the Companies Act and has its registered office at Mount Nepean, 37, L. J. Marg, Bombay-36. The defendant is a partnership firm. ( 3 ) IN the year 1984, the Projects and Development India Ltd. (PDIL) acting on behalf of NFL invited tenders for transportation of over-dimensional cargo from Kandia Port to Guna (M. P.) for the installation of the aforesaid project of NFL. The plaintiff submitted a tender in the amount of Rs. 11. 29 crores out of which Rs. 5. 15 crores was for the transportation of cargo and the balance of Rs. 6. 14 crores was for civil work such as widening of roads, strengthening of bridges, construction of bye-passes, etc. , for enabling the transport of the aforesaid cargo. The defendant gave a tender in the amount of Rs. 8. 50 crores. Rs. 4. 50 crores was for the transportation work and the balance of Rs. 4 crores was for the civil work. After submission of tenders, the plaintiff sent a letter dated 21st November 1984 emphasising as to how it had better capabilities for the performance of the contract. ( 4 ) THE case of the plaintiff is as follows.
Rs. 4. 50 crores was for the transportation work and the balance of Rs. 4 crores was for the civil work. After submission of tenders, the plaintiff sent a letter dated 21st November 1984 emphasising as to how it had better capabilities for the performance of the contract. ( 4 ) THE case of the plaintiff is as follows. On 27th December 1984 the representatives of the plaintiff met senior officers of the Ministry of Fertilizer and Chemicals and NFL and the former suggested to the latter that the plaintiff and defendant should jointly undertake the work of transportation of heavy and over-dimensional cargo not only for the one aforesaid project but also for 5 other fertilizer projects which were intended to be installed soon. There were meeting between the representatives of the plaintiff and a partner of the defendant firm. An agreement was arrived at between the parties to undertake the aforesaid transportation work on consortium basis. Accordingly, the parties sent a joint letter dated January 12, 1985 to NFL. In pursuance of the said joint letter, the NFL issued a letter of intent to the defendant, paragraph 14 of which reads as under : "in order to ensure timely and safe transportation of all the equipment you shall avail back up services from M/s. Urmilla and Co. as agreed to by you vide joint letter dated 12-1-85 by way of a sub-contract on agreed terms and providing for utilisation of their resources and manpower as may be necessary and copy of such unpriced agreement shall be furnished to NFL/consultant by 30-4-85. " ( 5 ) AFTERWARDS discussions took place between the parties as a result of which terms of agreement were settled. Those terms are recorded in letter dated 28th February 1985 addressed by the plaintiff to the defendant. However, no reply was received. The plaintiff sent another letter dated 21st March 1985 for sending the reply of the letter dated 28th February 1985, copy of which was attached with the former letter. Even after that letter, some discussions took place between the parties in regard to the manner in which the work was to be carried out with particular reference to the question whether the bridges on the road should be strengthened or bypassed by way of constructing bye-passes.
Even after that letter, some discussions took place between the parties in regard to the manner in which the work was to be carried out with particular reference to the question whether the bridges on the road should be strengthened or bypassed by way of constructing bye-passes. After that a letter dated 29th March 1985 was also sent reminding the defendant that the work was to be carried on a joint consortium basis. The defendant did not reply. The plaintiff reliably learnt that the defendants were making arrangements with another firm of two operators, namely, M/s. Lift and Shift and/or M/s. Natvarlal and Parekh Co. to undertake the said work. The plaintiff, therefore, felt aggrieved and brought the suit. ( 6 ) THE defendant contested the suit as well as the application. The defendant denies that there was any concluded contract between the parties. It was also pleaded that even if there was any agreement between the parties, the same was void being vague. The defendant also raised a plea that the present suit could not be completely and effectually decided without impleading NFL and that, therefore, the suit be dismissed for non-joinder of necessary parties. Further plea of the defendant is that the plaintiff is neither entitled to specific performance of the alleged contract nor to the grant of any injunction, because the relief of specific performance is barred by S. 14 of the Specific Relief Act and relief of injunction prayed for in the suit could be given only if there was an agreement containing negative covenant to the effect that the defendant would not join anybody else except the plaintiff in carrying out the transportation and civil work for which letter of intent was issued by NFL, while no such negative covenant existed. The defendant also raised a plea that the plaint was not properly valued for the purpose of Court-fee and jurisdiction and that the value should be the value of the contract which was Rs. 8. 50 crores on which amount the plaintiff must pay ad valorem Court-fee. ( 7 ) I have heard the learned counsel for the parties at length.
8. 50 crores on which amount the plaintiff must pay ad valorem Court-fee. ( 7 ) I have heard the learned counsel for the parties at length. It is well established that so that temporary injunction can be issued, the plaintiff must have a prima facie case, that the balance of convenience should favour him and that issue of temporary injunction is absolutely necessary for averting irreparable injury happening to the plaintiff. ( 8 ) THERE is hardly any prima facie case. Without prejudice to the decision of the case on merits, it is extremely doubtful if there was any concluded contract between the parties. Main reliance of the plaintiff is on a letter dated January 12,1985 written jointly by thand parties to NFL and Clause 14 of the letter of intent addressed by NFL to the defendant. That Clause 14 has already been reproduced. In the letter dated January 12,1985 it is firstly stated that the parties had discussions in the office of the NFL and it was thought desirable by the Ministry as well as NFL officials that the parties should work on the basis of consortium to facilitate the job of transportation of heavy equipment, etc. The letter then reads as under: "in pursuance of this official viewpoint we the undersigned namely J. M. Baxi and Co. and Urmila Transport hereby confirm our readiness to work jointly to undertake transportation of the heavy equipments to the respective project sites. We also agree that the equipments in possession of either party and also due to be imported in the near future will be utilised jointly as the situation demands in order to effect speedy transportation of the equipment. It is further agreed that one of the two companies will play the lead role in the transportation job for a particular unit while the other will be the back-up company in that job. To start with, so far as the National Fertilisers Limited (NFL) is concerned M/s. J. M. Baxi and Co. will be the leader. For the subsequent units the nomination of the lead and the back-up company will be decided by mutual consultations among the two companies on the understanding that the lead and back-up status will be divided equally so far as the number of units is concerned.
will be the leader. For the subsequent units the nomination of the lead and the back-up company will be decided by mutual consultations among the two companies on the understanding that the lead and back-up status will be divided equally so far as the number of units is concerned. In regard to personnel the two companies will also share their resources so that the administrative responsibilities are duly rationalised among the two companies. Differing viewpoints have been held by the two companies in regard to crossing of bridges. In the J. M. Baxi proposal, a strong emphasis is laid on strengthening of bridges while Urmila has favoured the by-pass method. The workable approach was that a technical review, bridge by bridge, will be undertaken within the specific time schedule to determine the prospects of its strengthening and those bridges which are not capable of this treatment would be stipulated for by-pass. In order to speed up this process of determination, both companies would utilise their respective positions with various States and local agencies so that the time period for such determination and obtaining clearance is minimised. It was recognised that while both parties have agreed to work on the basis of consortium approach, many internal arrangements between the two parties will have to be sorted out to render the most satisfactory services to the concerned fertiliser units. For this purpose, the two parties agreed to engage in a dialogue to sort out the modalities of operation which are presently envisaged and which may also arise from time to time in future. It was realised that each individual company either possesses or would generate the necessary physical and financial resources to undertake these jobs individually but in the interest of alignment with the officially expressed viewpoint, the parties have willingly agreed to work jointly. Such an agreement, of course, will be workable when the parties play a constructive and accommodating role in solving the many problems which will arise in the kind of massive transportation job which will be involved for lifting these heavy equipments to the sites. The two parties have assured to adopt this cooperative attitude.
Such an agreement, of course, will be workable when the parties play a constructive and accommodating role in solving the many problems which will arise in the kind of massive transportation job which will be involved for lifting these heavy equipments to the sites. The two parties have assured to adopt this cooperative attitude. We hope that on the basis of this understanding the NFL will see their way to issue the Letter of Intent immediately to the selected lead company so that they may undertake full mobilisation of the resources and also approach the back-up company accordingly. " ( 9 ) THIS had become necessary to reproduce the aforesaid portion because that is necessary to be read carefully for the purpose of finding out if actually any agreement was arrived at. Learned counsel for the plaintiff laid great stress on the occurrence of the word "agreed" at many places. Learned counsel for the defendant laid great stress on the fact that the agreement was absolutely silent as to how the job was to be carried out in actuality, what type of trucks and machinery had to be applied and how the bridges falling on the way were to be crossed. In my opinion, the aforesaid joint letter was merely an agreement in principle to carry out the job in consortium, but no contract emerged. That is why, it has been written that it was recognised that while both the parties had agreed to work on the basis of consortium approach, many internal arrangements between the two parties had to be sorted out. It is also written that the parties would engage in a dialogue to sort out the modalities of operation. There is also mention of as to how to cross the bridges. The defendant laid emphasis on strengthening of the bridges while the plaintiff favoured by-pass method. It was, therefore, agreed that a technical review would be taken bridge by bridge and then the matter would be decided. Hence such type of agreeing in principle cannot take the place of a concluded contract. ( 10 ) LEARNED counsel for the plaintiff also laid great stress on Clause 14 and alleged that the agreement dated 12th January 1985 coupled with that clause clearly meant that a concluded contract had come into existence.
Hence such type of agreeing in principle cannot take the place of a concluded contract. ( 10 ) LEARNED counsel for the plaintiff also laid great stress on Clause 14 and alleged that the agreement dated 12th January 1985 coupled with that clause clearly meant that a concluded contract had come into existence. He emphasised that the said clause made it obligatory on the defendant to avail of the back-up services, of the plaintiff in terms of joint letter dated 12th January 1985. The learned counsel for the defendant, however, relied upon the words "as may be necessary" occurring in that clause and urged that those clearly indicated that the back-up services of the plaintiff were to be relied upon only in the event of defendant feeling necessity for the same. The contention of the learned counsel for the plaintiff in this respect was that the words, "as may be necessary" did not mean that as might be thought to be necessary by the defendant but meant that the defendant could avail of the back-up services of the plaintiff as was necessitated by the situation that might come in the way ofthe execution of the job. Prima facie I agree with the learned counsel for the defendant and find that the natural meaning of the aforesaid words occurring in the clause as a whole, coupled with the fact that the letter of intent was issued in favour of the defendant only is that the defendant was to avail of the services of the plaintiff only if felt necessary. That view gets strengthened if we read Clause 14 of the letter of intent in the context of Clause 6 of the terms and conditions contained in the original tender which reads as under : "6. Sub-Letting Of Contracts. The contractor shall not assign or sublet the contract or any part thereof or allow any persons/firms to become interested therein in any manner whatsoever. " ( 11 ) IT is clear from the above that the defendant was not entitled to join any body as sub-contractor but vide Clause 14 he was permitted to join the plaintiff company. Therefore, there was only permission to the defendant to avail the back-up services of the plaintiff in case of need.
" ( 11 ) IT is clear from the above that the defendant was not entitled to join any body as sub-contractor but vide Clause 14 he was permitted to join the plaintiff company. Therefore, there was only permission to the defendant to avail the back-up services of the plaintiff in case of need. ( 12 ) THE plaintiff also relies upon some letters written by it to the defendant and those are letters dated 28th February 1985, 21st March 1985 and 29th March 1985. In the letter dated 28th February 1985 it was stated by the plaintiff that in pursuance of letter dated 12th January 1985 and on account of the meeting which had been held between the parties, both prior to and after the said letter, the terms and conditions which were agreed between the parties were being given. Thereafter the terms and conditions were mentioned. No reply was received from the defendant. Letters dated 21st March and 29th March 1985 were reminders, to the defendant to send the reply. On the basis of these letters the plaintiff wants to conclude that the terms and conditions as mentioned in the letter dated 28th February 1985 had been agreed upon. ( 13 ) THE aforesaid letters have no legal effect. It was not obligatory on the part of the defendant to have responded to those letters or to have contradicted the arriving at of the terms and conditions, as mentioned in the letter dated 28th February 1985. In Bank of India Ltd. v. Rustom Fakirji Cowasjee, AIR 1955 Bom 419 it was held that so that a contract could be concluded it was necessary that there should be an offer and acceptance and that the mere silence of one party to the offer of (he other did not amount to assent of the party remaining silent. In the present case, therefore, the mere silence of defendant did not amount to acceptance of the terms and conditions which were contained in the letter dated 28th February 1985.
In the present case, therefore, the mere silence of defendant did not amount to acceptance of the terms and conditions which were contained in the letter dated 28th February 1985. ( 14 ) NOT only that the allegations made in the documents relied upon by the plaintiff do not spell out the existence of a concluded contract between the parties, there are following circumstances appearing from the documents produced by the defendant negativing the existence of any contract: (A) in Clause 14 of the letter of intent sent by NFL to the defendant it was stated that unpriced agreement between the parties (i. e. plaintiff and defendant) should reach NFL by 30th April 1985. That means that there was no concluded contract otherwise where was the necessity of sending such an agreement to NFL by the defendant? (B)THE defendant has placed on record a photostat copy of a telex dated 7th February 1985 sent by the plaintiff to NFL. In that telex the following portion is very important: "we accordingly submitted a joint undertaking on 12th January, 1985 and we were to give you our memorandum of undertaking. However we were not able to finalize our verbal agreement with J. M. Baxi as J. M. Baxi s senior partner was not available. Meanwhile we understand that the letter of intent has been issued to J. M. Baxi, as they would be the lead contractor for your project. Furthermore, the mobilization advance is also to be paid to the respective parties depending on the scope and quota of their work. As we have not yet received a copy of the letter of intent from J. M. Baxi,. we are not aware of the terms and conditions as regards price, advance and the scope of work. " ( 15 ) IT. is clear from the above that the plaintiff did not even know the scope of the work. When the scope of the work was not known to one of the parties to the alleged contract, how could there be a concluded contract between the said parties? It also appears from the aforesaid portion of the telex of the plaintiff that they did not know the quota of their work and that is why it was demanding the details about the same so that it may be able to claim mobilisation advance.
It also appears from the aforesaid portion of the telex of the plaintiff that they did not know the quota of their work and that is why it was demanding the details about the same so that it may be able to claim mobilisation advance. When the plaintiff itself did not know its part, i. e. , quota of work, how could it be said that there was a concluded contract between the parties? (c) Then there is a reply to the aforesaid telex by NFL dated 23rd February 1985. That reply was to the effect that it was understood that extent to which the defendant would require plaintiffs back-up services was a matter to be settled amongst the parties that NFL recognised the defendant alone as responsible for the execution of the contract and that it would be the defendant who would be made payments (payable?) by NFL. That clearly showed that NFL was not recognising the plaintiff as having any independent role. It also shows that the contention of the defendant is correct, to the extent that the services of the plaintiff were to be availed of only if the defendant felt need of the same. ( 16 ) WHEN the aforesaid is the view to the affect that there was no concluded contract between the parties, there is hardlyany justification for issue of any injunction in favour of the plaintiff. But even if we suppose for the sake of arguments that there did exist a concluded contract between the parties, the plaintiff is not entitled to any relief. The plaintiff prays for specific performance of the contract. In this respect S. 14 of the Specific Relief Act is very important. Relevant portion of the same reads as under : "14. (1) The following contracts cannot be specifically enforced, namely : (a) a contract for the non-performance of. which compensation in money is an adequate relief; (b) 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; (c) a contract which is in its nature determinable; (d) a contract the performance of which involves the performance of a continuous duty which the Court cannot supervise.
" ( 17 ) IN the present case, compensation in money will be adequate relief in the event of non-performance of the contract. The plaintiff must know as to what is the margin of profit in such work and can calculate the amount due to it on that basis. Further, specific performance cannot be granted in view of clauses (b) and (d ). The present contract is such as involves the performance of a continuous duty which the court cannot supervise. The parties have to take decision daily as to how the work of transportation of a particular machinery will be executed. They will also have to continuously decide as to whether a particular bridge should be bypassed or strengthened. In fact the entire execution of the work will depend upon the consistent co-operation of the parties. The court cannot supervise the day to day affairs. Further if the contract exists, it consists of numerous details and its execution depends upon the personal qualification and volition of the parties. As already mentioned, it will be for the parties to decide from time to time as to how problems regarding transportation coming before them will be solved and as to how civil work connected therewith will be performed. ( 18 ) ACCORDING to S. 41 (e) of the Specific Relief Act, an injunction cannot be granted to prevent the breach of a contract, the performance of which would not be specifically enforced. However, S. 42 says that in case the court is unable to compel specific performance of an affirmative agreement, it shall not be precluded from granting an injunction to perform the negative agreement. It is, therefore, clear that if specific performance of a contract cannot be granted, no injunction can be issued in respect of the same except when there is a negative agreement between the parties. In the present case there was no negative agreement. ( 19 ) THE learned counsel for the plaintiff relied upon clause 14 of the letter of intent read with letter dated 12th January 1985 and urged that it was clear that the defendant was bound to avail the back-up services of the plaintiff which meant that he was under a negative agreement not to avail of such services of any one else except the plaintiff.
He also emphasised that according to clause 6 of conditions of contract between defendant and NFL (reproduced in paragraph 10), the defendant was not entitled to employ any one as a sub-contractor, without the permission of NFL, that the only permission granted in that respect was in favour of the plaintiff which meant that defendant was under a negative agreement aforesaid. ( 20 ) I do not agree with the learned counsel. It is absolutely necessary that the negative agreement should be distinct and separate from the affirmative agreement . That view was expressed in Shree Ambarnath Mills Corpn. , Bombay v. D. B. Godbole, AIR 1957 Bom 119 . In the present case there was no distinct or separate agreement emphasising that the defendant could not join anybody else except the plaintiff. Rather clause 6 of conditions of contract (already reproduced in paragraph 10) shows that the defendant could, with the permission of NFL, join any other party. Therefore, there is no absolute bar against the defendant from joining any other party for back-up services. ( 21 ) THE balance of convenience does not favour the plaintiff. The inconvenience which the plaintiff will have in the event of refusal of injunction is mentioned in paragraph 15 of the plaint. The relevant portion of that paragraph reads as under : "the plaintiffs submit that in case, the actual work of construction of roads and other civil works or the transportation work actually starts with defendants doing it either alone or with the back-up services of any other party the plaintiffs would be completely ousted and excluded. The plaintiffs would not only stand to lose their share in the profits but their equipment andavailable manpower would remain idle. The plaintiffs would suffer a serious and grave loss of reputation and their chances of getting further contracts of similar magnitude would also be diminished. The loss which the plaintiffs would suffer would thus be of such nature that monetary compensation alone would not be adequate. There is no way of calculating the quantum of damages that the plaintiffs will suffer in view of the breach of contract. The breach of this agreement shall adversely affect the plaintiffs prospects in the next five agreements. The plaintiffs equipments costing crores of rupees shall remain idle. The plaintiffs business shall almost come to a standstill.
There is no way of calculating the quantum of damages that the plaintiffs will suffer in view of the breach of contract. The breach of this agreement shall adversely affect the plaintiffs prospects in the next five agreements. The plaintiffs equipments costing crores of rupees shall remain idle. The plaintiffs business shall almost come to a standstill. " ( 22 ) IT is apparent that all the inconveniences mentioned by the plaintiff are imaginary. As already mentioned, the plaintiff can be compensated in terms of money because the plaintiff can easily calculate the margin of profit in such cases. It is not understandable as to how the plaintiff will lose all other five contracts of transportation, etc. , which are expected to be given. ( 23 ) AS against that, if injunction is issued the defendant will be compelled to commit a breach of agreement with NFL and instead of earning profits, will expose himself to the risk of paying huge amounts of damages to the latter. Not only that, the defendant might be black-listed by NFL and other Government controlled concerns for entrusting future work. It is stated by the defendant in the written statement that already performance guarantees worth lacks of rupees to NFL have been given because it is the responsibility of the defendant to see that the entire work is done. The defendant, if he is compelled to commit breach of contract with NFL on account of a temporary injunction, will have to bear the consequences of breach of those performance guarantees. Further, granting of a temporary injunction, will in a way be punishing NFL who is not a party to the case and who had no opportunity of being heard, because on account of inability of the defendant, caused by the temporary injunction against him, to perform his part of the contract, the entire project of the NFL will be delayed. ( 24 ) OBVIOUSLY there will be hardly any irreparable injury to the plaintiff for averting which issue of temporary injunction is required. I have already mentioned that the injury, if any, can be compensated in terms of money. ( 25 ) UNDER these circumstances I dismiss the application (I. A. 2333 of 1985 ). The restraint order dated 2nd May 1985 which amended the original ex parte injunction order granted on April 25,1985 automatically stands vacated.
I have already mentioned that the injury, if any, can be compensated in terms of money. ( 25 ) UNDER these circumstances I dismiss the application (I. A. 2333 of 1985 ). The restraint order dated 2nd May 1985 which amended the original ex parte injunction order granted on April 25,1985 automatically stands vacated. ( 26 ) IT may be mentioned that whatever has been stated in this order is only for the purpose of deciding this application for issue of temporary injunction and will not, in any way, affect the decision of the case on merits. ( 27 ) I. A. 2333 of 1985 stands disposed of.