B. N. Kirpal ( 1 ) THIS order will dispose of the plaintiff s application under Order 39, Rules 1 and 2 read with Section 151 Civil Procedure Code wherein it is prayed that the defendants be restrained from selling or disposing of any seeds under the brand name and/or trade name pioneer . ( 2 ) THE aforesaid application has been filed by the plaintiff for getting interim relief during the pendency of the suit for permanent injunction filed by it. In the suit the plaintiff has, inter alia, alleged that it is a corporation registered outside India and was engaged world wide in the business of research and development, production and sale of hybrid seeds of various agricultural crops produced by the crossing of proprietary inbred lines developed through its own research and development efforts. It is further alleged that it is the owner of the trade mark pioneer which is registered in the various countries of the world, including India. According to the plaintiff defendant No. 2, who is the Director of defendant 1, and was closely connected with the plaintiff in USA, approached the plaintiff for setting up business in India. Pursuant thereto defendant 1 is stated to have been incorporated on 28th February, 1977 with the object to develop, grow, raise, process, buy, sell, export, import and deal in all kinds of seeds. Defendant 2 was made a Director of the said defendant 1. ( 3 ) IN the aforesaid company, namely, defendant 1, it is further alleged that the plaintiff holds 39. 1% of the equity share capital, while defendant 2 and his sister, Mrs. S. Kapur together hold 59. 9% shares. While the nominal capital of the company was Rs. 30 lakhs the paid up and subscribed capital was only Rs. 5 lakhs. According to the plaint, the plaintiff holds 2000 shares having the face value of Rs. 2 lakhs, while defendant 2 holds shares worth Rs. 1 lakh, his sister holds shares worth Rs. 1,99,600. Four shares worth Rs. 400 are held by others. 30 lakhs the paid up and subscribed capital was only Rs. 5 lakhs. According to the plaint, the plaintiff holds 2000 shares having the face value of Rs. 2 lakhs, while defendant 2 holds shares worth Rs. 1 lakh, his sister holds shares worth Rs. 1,99,600. Four shares worth Rs. 400 are held by others. ( 4 ) AFTER the establishment of defendant I following agreements were entered into between the plaintiff and defendant 1 : (A) A Technical know-how Agreement dated 31st July, 1979 whereby, according to the plaintiff, it provided to defendant 1 free of cost basic breeding materials and inbred lines with a view to defendant 1 producing there from parent seeds and commercialised production of seeds from the said parent seeds. (b) On 13th August 1981 a Registered User Agreement was entered into between the plaintiff and defendant 1. The plaintiff is said to be the registered proprietor of the mark "pionelr" and trapezoid symbol, which are started to have been registered in India having Registration Nos. 269686 and 269687, respectively, falling under Class 31. Some of the clauses of the agreement will be dealt with in greater detail subsequently, but here it may be noted that by the said agreement the plaintiff granted to defendant 1 royalty free non-exclusive right to use the trade mark pioneer on the terms and conditions mentioned in the said agreement. (c) On 19th July, 1985 a supplementary agreement was entered into whereby some amendment was made in the Registered User Agreement. It may here be also noted that on requisite application being filed in Form TM-28, the Registrar of Trade Marks vide the letter dated 8th July 1987 informed the defendant 1 that it had been registered as a Registered User of the trade mark and the symbol from the date of the application up to !2th August 1988 or till the termination of the Registered User Agreement, whichever was earlier. It was further stated that this registration was subject to the conditions and the restrictions mentioned in the Registrar s Office letter dated 8th July, 1987. One of the conditions which was stipulated in the said letter of 8th July 1987 was as follows : "the trade mark is to be used by the Regd. User in relation to the goods only so long as they are manufactured or marketed by the Regd. One of the conditions which was stipulated in the said letter of 8th July 1987 was as follows : "the trade mark is to be used by the Regd. User in relation to the goods only so long as they are manufactured or marketed by the Regd. User in strict accordance with the specification, formulate and standards of quality laid down, directions, and instructions given and information supplied by the Regd. Prop. from time to time and only so long as the Regd. Prop. or his authorised representative has the right and is permitted to inspect the goods on the premises of the Regd. User and is supplied on request, with the samples of the goods. " (d) A Research Agreement dated 21st July, 1986 was entered into between M/s Pioneer Overseas Corporation (a wholly owned subsidiary of the plaintiff) and defendant 1 whereby the said Corporation provided to defendant 1 reasearch informations, materials, know-how and was required to render services and assistance associated thereto. (e) Along with the aforesaid Research Agreement, another Agreement daed 21st July, 1986 was entered into between the plaintiff an defendant 1 whereby the plaintiff advanced to defendant 1 US $ 1 million to set up, upgrade and modernise its research and other facilities for conducting research for and on behalf of the plaintiff. This advance was granted without any security and on non-repatriable basis and was required to be adjusted against the future cost of research incurred by defendant 1 on behalf of the plaintiff. ( 5 ) IT is alleged by the plaintiff that since 1981-82 until 1987 the plaintiff has, without any security, funded the entire research activities/programme of the defendat 1 amounting to Rs. 2,09,34,682. ( 6 ) THE allegation of the plaintiff is that it has invested in defendant 1 over Rs. 2 crores which is far in excess of the equity holding of defendant 2 and his sister, which is approximately Rs. 2,99. 600. ( 7 ) ACCORDING to the plaintiff until 1985-86 defendant 1 continuously incurred losses which were stated to have been absorbed by the plaintiff. It is further alleged that it is only since 1987 that defendant I was on the threshold of business boom and had made profits of any significance. It is at this stage that disputes and differences seem to have arisen between the plaintiff and defendant 2 and his sister. It is further alleged that it is only since 1987 that defendant I was on the threshold of business boom and had made profits of any significance. It is at this stage that disputes and differences seem to have arisen between the plaintiff and defendant 2 and his sister. This led to legal proceedings being instituted by the plaintiff in USA against the defendant 2, which was followed by action being taken by defendant 1 of calling a meeting of defendant 1 with a view to remove the representatives of the plaintiff from its Board. This led to further litigation, this time in Delhi, when Suit No. 783/88 was held in this Court for an injunction restraining the defendants from holding the said meeting. ( 8 ) IT is not necessary to refer to the other disputes between the parties, in any great details, except to note that during this time trained technical personnel of defendant 1 resigned from service. It was contended on behalf of the defendants that about 140 employees had resigned at the instigation of the plaintiff. Be that as it may, it is alleged by the plaintiff that it suspected that defendant 1 was not strictly complying with the standards or specification in respect of the seeds which were being sold in the market under the trade mark and trapezoid symbol of "pioneer". It is further alleged that in the second week of May, 1988 the plaintiff obtained a sample of corn seeds bearing the trade mark of the plaintiff and the same was forwarded to the Department of Agriculture, Government of Andhra Pradesh on or about 17th May, 1988 by M/s. Pioneer Overseas Corporation with a request to test the quality of the said seeds. The said Department of Agriculture is stated to have submitted a report dated 27th May 1988 according to which the aforesaid seeds which were sent did not comply with the standards which had been laid down by the plaintiff. From this the plaintiff seeks to deduce that the defendants 1 and 2 are selling substandardquality of seeds which does not conform to the germination specification laid down by the plaintiff. From this the plaintiff seeks to deduce that the defendants 1 and 2 are selling substandardquality of seeds which does not conform to the germination specification laid down by the plaintiff. It is averred that this substandard quality seeds is being sold in the market by the defendants which is not only going to cause loss to the unsuspective farmers, but will also result in the loss of the plaintiff s goodwill, reputation, business image and business interest. ( 9 ) ACCORDING to the plaintiff it tried through its subsidiary company, M/s. Pioneer Overseas Corporation to gain access to the research centres and to ascertain the nature of the research work and the laboratory tests which were being carried out by defendant 1 on the seeds produced by the farmers. The defendants are stated to have denied such access to the plaintiff. According to the plaintiff Clause 3 of the Registered User Agreement gives it a right to seek such inspection. This inspection was sought vide a letter dated 10th May, 1988, but was refused by a letter dated 23rd May, 1988 written, on behalf of defendant 1, by its Advocates and Solicitors. Another request for inspection was made on 24th May, 1988, but the same was also not aceeded to. ( 10 ) THE lawyers for the plaintiff then sent a notice, dated 28-5-1988, to the defendant 1 in which it was, inter alia, stated that the plaintiff believed that under its trade mark the defendant 1 had sold seeds in the market which were of substandard quility. It was further alleged that the plaintiff believed that the stocks of seeds which were lying in possession of defendant 1 did not conform to the standards and specifications of the plaintiff and as such were incapable of being sold in the market under the plaintiff s trade mark. The said notice then referred to Clause 4 of the Registered User Agreement and while purporting to invoke the said clause, it called upon defendant 1 to restrain forthwith from selling stocks of seeds, lying with defendant 1, under the plantiff s trade mark. The said notice then referred to Clause 4 of the Registered User Agreement and while purporting to invoke the said clause, it called upon defendant 1 to restrain forthwith from selling stocks of seeds, lying with defendant 1, under the plantiff s trade mark. ( 11 ) THE plaintiff thereafter filed the present suit, inter alia, praying for a decree of permanent injunction prohibiting the defendants from using the trade mark of the plaintiff, or in the alternative, for a decree to the effect that the defendants could sell the stock of seeds lying with them and also that which may be produced in future only after the plaintiff s representatives have been permitted to test the quality of the seeds and approved them. ( 12 ) THE defendant, anticipating the institution of legal proceedings, had also filed a caveat. Thereafter, a reply by way of an affidavit of Mr. T. R. Sawhney was filed by the defendants to the application under Order 39, Rules 1 and 2 Civil Procedure Code being IA 3392/88. In the reply it was alleged that the plaintiff had conspired with 142 of defendant 1 s employees to drive defendant 1 out of business whereby the said employees resigned from employment of defendant 1 leaving the standing crops unattended and causing damage by overt acts such as burning the stored seeds. It was alleged that remedial action was nevertheless taken and fresh employees had been recruited. The case of the defendants was that the Registered User Agreement dated 13th August, 1981 still subsisted and had "neither been terminated nor is capable of termination without reasonable cause before the expiration of the said agreement". It is further alleged that even after termination the defendants, by virtue of Clause 10 of the agreement, were permitted to use the mark for a further period of 18 months of the termination. It was, therefore, submitted that no injunction could be issued restraining the use of the trade mark with immediate effect. The defendants also denied the allegation that the seeds produced and sold by them were of substandard quality. It was, therefore, submitted that no injunction could be issued restraining the use of the trade mark with immediate effect. The defendants also denied the allegation that the seeds produced and sold by them were of substandard quality. It was also submitted that the sample which was relied upon by the plaintiff, which was stated to have been tested by the Department of Agriculture in Andhra Pradesh, was either an old one stored under deplorable conditions or the said sample did not originate from the defendant 1 at all, and that the same had been fabricated by the plaintiff. It is further alleged that the present suit was not a suit under Section 29 of the Trade and Merchandise Marks Act or even a suit for passing off under the common law and there could be no injunction issued restraining the defendant 1 from using the trade mark ploneer cause defendant 1 s user was permitted and licensed used. It was further stated in the said affidavit that defendant 1 assured the Court that it shall fully comply with the standards and specifications of the plaintiff during the pendency of the Registered User Agreement and that no injunction, as prayed for, should be granted. It was also submitted that the grant of injunction would lead to irreparable loss and injury to the farmers and would be a blow to the agricultural growth. Lastly, it was stated in the affidavit that the Registered User Agreement was not enforceable since it was hit by Section 28 (l) (c) of the Foreign Exchange Regulations Act as the said agreement had not been approved by the Reserve Bank of India. ( 13 ) ON behalf of the plaintiff the affidavit of one Shri Vinay Dubey was filed controverting the avertments made in the reply affidavit of defendant 1, and the allegations contained in the suit and the application were reiterated. ( 14 ) ON 10th June, 1988 when the application came up for hearing before the Vacation Judge, an agreed order was passed to the effect that some seeds be brought to this Court and germination test should be carried out in the High Court premises by the seeds being planted in the High Court premises by the Head Gardener in the presence of the representatives of the parties. This order was presumably passed because the defendant challenged the correctness of the report which was being relied upon by the plaintiff while contending that the quality of seeds which were being sold by the defendant under the mark pioneer was not up the prescribed standards. ( 15 ) ON the next date of hearing some seeds were produced in Court, but the counsel for the plaintiff raised doubts with regards to genuineness of the seeds so produced. With the consent of the counsel for the parties a new procedure was laid down for carrying out the germination tests. A local Commissioner was appointed with a direction that he should himself collect the seeds from the defendant and, then the said seeds should be put to germination test. The said test was to be carried out not in the premises of the High Court, but in a laboratory and under the overall supervision of the Commissioner. The Commissioner was also directed to carry out the physical purity test of the bags which were opened by him. ( 16 ) THE report of the Local Commissioner has not yet been received and the outcome of the said tests are not yet known. ( 17 ) ON behalf of the parties, apart from addressing oral arguments, written arguments were also submitted. On behalf of the plaintiff the learned counsel had first contended that it was entitled to specifically enforce its right under Clause 3 of theagreement and the Court ought to direct the defendant to give inspection to the plaintiff. In the written argument which were filed subsequently it has been contended on behalf of the plaintiff that at the interim stage it was not seeking to enforce the said right, but it was now only seeking an injunction restraining the defendant from selling its goods under the trade mark pioneer . At this stage it will be useful to refer to the aforesaid two clauses of the agreement, namely, Clauses 3 and 4. Clause 3 of the agreement reads as follows : "3. PIONEER has the right, at all reasonable times, to inspect the goods in relation to which the Trademarks are to be used, as well as the methods of producing such goods, on the premises of USER, and elsewhere, as PIONEER considers necessary to carry out the purposes of inspection as part of appropriate quality control. PIONEER has the right, at all reasonable times, to inspect the goods in relation to which the Trademarks are to be used, as well as the methods of producing such goods, on the premises of USER, and elsewhere, as PIONEER considers necessary to carry out the purposes of inspection as part of appropriate quality control. "clause 4 of the said agreement reads as follows : 4. PIONEER has the right to prohibit practices which it believes will be detrimental to the goods and may prohibit sale under the Trademarks of any goods which PIONEER determines were produced by improper methods or do not conform to PIONEER standards and specifications. USER shall accept as final and binding any written notice given by PIONEER to such effect and shall thereupon take such steps as shall be necessary to satisfy the requirements of PIONEER. "it was in exercise of the powers conferred by aforesaid Clause 4 of the agreement that notice dated 28th May, 1988 was sent on behalf of the plaintiff to the defendants calling upon them to refrain from selling the stock of seeds lying with the defendants under the trade mark "pioneer". ( 18 ) IT has been contended by the learned counsel for the plaintiff that the aforesaid Clause 4 of the agreement contains a negative covenant, and the said negative covenant can be specifically enforced by seeking an injunction. Without conceding but on the assumption that the Court may not grant specific performance of the affirmative covenant contained in Clause 3 of the agreement relating to the inspection, the submission of the learned counsel for the plaintiff is that by virtue of Section 42 of the Specific Relief Act the Court is not precluded from granting an injunction to perform the negative covenant. The submission of the learned counsel for the plaintiff is that the plainiff is the owner of the trade mark pioneer and it was on the basis of certain terms and conditions that, by virtue of the Registered User Agreement, the defendant was permitted to sell seeds under the trade mark "pioneer". The submission of the learned counsel for the plaintiff is that the plainiff is the owner of the trade mark pioneer and it was on the basis of certain terms and conditions that, by virtue of the Registered User Agreement, the defendant was permitted to sell seeds under the trade mark "pioneer". It was submitted that an essential part of the agreement was that the representatives of the plaintiff would be entitled to inspect the manner and method of treatment of the seeds in order to see that proper quality control was being maintained, and a necessary corollary of this was that the plaintiff could prohibit the sale of the seeds under the trade mark pioneer , when it determines that the seeds were produced by improper methods and do not conform to its standards and specifications. The notice given in writing, to this effect, was to be final and binding. The plaintiff is not seeking an injunction for restraining the defendant from selling the seeds, but the only injunction which has been sought for is that the defendants should not sell the seeds under the trade mark pioneer . ( 19 ) ON behalf of the defendants it has been inter alia, contended that the registration of the agreement was granted by the Trade mark authorities and some conditions of registration were imposed. If the plaintiff has any grievance, it is submitted, then the proper remedy for the plaintiff is to seek redress under the provisions of Section 52 of the Trade and Merchandise Marks Act, 1958. It was contended that it was open to the plaintiff to approach the Registrar for cancellation of the Registered User Agreement. ( 20 ) IN my opinion, there is no force in the aforesaid contention. It is not doubt true that the plaintiff could have approached the Registrar under Section 52, but the plaintiff in the present case does not want the cancellation of the agreement. What is desired is that the defendant should not act country to the terms of the agreement. The plaintiff has approached this Court for enforcement of the terms of the Registered User Agreement. The plaintiff s prayer is not for its cancellation. What is desired is that the defendant should not act country to the terms of the agreement. The plaintiff has approached this Court for enforcement of the terms of the Registered User Agreement. The plaintiff s prayer is not for its cancellation. If the plaintiff had desired cancellation of the Registered User Agreement by the Trade mark authorities, then, possibly, the plaintiff would have had to take recourse to the procedure under Section 52 of the said Act, but when such a prayer is not being put forth, then the provisions of Section 52 will have no application. In any case, the provisions of Section 52 do not in any way expressly bar or oust the jurisdiction of the Civil Court to grant a relief of injunction, if a legal right of the plaintiff is being violated. ( 21 ) IT was then contended on behalf of the defendant that the suit itself was not maintainable because the Registered User Agreement was violative of Section 28 (l) (c) of the Foreign Exchange Regulation Act, 1973 and the said agreement was void under Section 28 (2) of the said Act and no suit could lie to enforce a void agreement. The said Section 28 (1) and (2) of the Foreign Exchange Regulation Act reads as under : "28 (1) Without prejudice to the provisions of Section 47 and notwithstanding anything contained in any other provision of this Act or the Companies Act, 1956 (1 of 1956), a person resident outside India (whether a citizen of India but is resident in India, or a company (other than a banking company) which is not incorporated under any law in force in India or in which the non-resident interest is more than forty per cent, or any branch of such company shall not, except with the general or special permission of the Reserve Bank,- (a) act, or accept appointment, as agent in India or any person or company, in the trading or commercial transactions of such person or company ; or (b) act, or accept appointment, as technical or management adviser in India of any person or company ; or (c) permit any trade mark, which he or it is entitled to use, to be used by any person or company for any direct or indirect consideration. (2) Where any such person or company (including its branch) as is referred to in sub-section (1) acts or accepts appointment as such agent, or technical management adviser, or permits the use of any such trade mark, without the permission of the Reserve Bank, such acting, appointment or permission, as the case may be, shall be void. "the submission on behalf of the defendant is that, in the present case, the plaintiff has permitted the defendant to use its trade mark for direct and/or indirect consideration and the Registered User Agreement had been entered into without first obtaining the general or special permission of the Reserve Bank of India. It is further submitted that by virtue of sub-section (2) of Section 28 the Registered User Agreement is to be regarded as being void. The agreement being void, it was contended, the question of this Court specifically enforcing any of the terms thereof cannot arise. ( 22 ) THE first question which arises, while considering the aforesaid contention, is as to whether there is any direct or indirect consideration for permission to use the trade mark. The contention of the defendant is that direct or indirect consideration includes the holding and allotment of shares and dividends thereon to the plaintiff, the technical know-how agreement entered into between the parties, the loan agreement which has been signed, the receipt of Indian know-how and purchase of Indianseeds by the plaintiff. The submission is that by virtue of the said agreements there is an indirect effect on foreign exchange, even though, Section 28 of the Foreign Exchange Regulation Act is not limited to monetary consideration. ( 23 ) THE perusal of the Registered User Agreement shows that the plaintiff had granted the user of the trade mark without charging any royalty from the defendant. This royalty-free non exclusive right to use the trade mark was granted only in relation to the goods in India, but also for exports of seeds which were produced from basic breeding materials to some of the Asian countries. The Registered User Agreement does not provide for any consideration in the form of money being paid by the defendant to the plaintiff for the use of the said trade mark. I am, therefore, not able to accept the contention of the counsel for the defendant that the said Registered User Agreement provides for any direct consideration. The Registered User Agreement does not provide for any consideration in the form of money being paid by the defendant to the plaintiff for the use of the said trade mark. I am, therefore, not able to accept the contention of the counsel for the defendant that the said Registered User Agreement provides for any direct consideration. ( 24 ) ASSUMING that the word "consideration" occurring in Section 28 (l) (c) of FERA has the same meaning as it has in Indian Contract Act, it has to be examined whether in the present case the other agreements which were entered into between the parties, and the rights which flow from them, can be considered to be indirect consideration for the use of the trade mark by the defendant. As already noted hereinabove, about 5 different agreements, including one supplementary agreement, were entered into between the parties. The first agreement was signed on 31st July, 1979 whereby the plaintiff agreed to provide to the defendant technical assistance and advice for the breeding, production and selling of certain types of seeds. This agreement was complete in itself and required the approval of the Government of India. The said agreement contained mutual promises and while it permitted the defendant to sell commercial seeds, as aforesaid, the agreement did not contain any clause or provision relating to the trade mark to be used by the defendant. ( 25 ) THE Registered User Agreement, with which we are concerned in this case, was entered into between the parties on 13th August, 1981. It is no doubt true that there is a reference in this agreement to the earlier agreement dated 31st July, 1979, but it is not possible for me to come to the conclusion that the consideration for this agreement was an agreement entered into between the parties two years earlier. The giving of the use of the trade mark pioneer was not a consideration for the entering into a technical know-how agreement in the year 1979, and nor was the technical know-how agreement a consideration for the use of the mark pioneer . The Registered User Agreement was not entered into between the parties because of the technical know-how agreement having been entered in to between them. The Registered User Agreement was not entered into between the parties because of the technical know-how agreement having been entered in to between them. The technical know-how agreement dated 31st July, 1979 was a complete agreement and did not require any further thing to be done by any of the parties for making it enforceable. Similarly, the Research Agreement of 21st July, 1986 and the agreement of loan also dated 21st July, 1986 cannot be linked with the Registered -User Agreement entered into between the parties 5 years earlier. Each such Agreement entered into between the parties was complete in itself and, in any, case, it is not possible for me to accept the contention of the learned counsel for the defendant that toe technical know-how agreement of 1979 or the Research Agreement of 1986 can, possibly, be regarded as a "consideration" for the grant of user of the plaintiff s trade mark pioneer . The agreement of 13th August, 1981 is an arrangement which was arrived at between the parties whereby the defendant was given the, permission to use the plaintiff s trade mark pioneer subject to the terms and conditions contained in the said agreement. The grant of this user was without any direct or indirect consideration and, therefore, the provisions of Section 28 (l) (c) of FERA were not applicable. ( 26 ) I might here notice the contention of the learned counsel for the plaintiff with regard to the construction of Section 28 (1 ) (c) of FERA. It is submitted by the plaintiff that the word "consideration" occurring in Section 28 (l) (c) must mean consideration involving foreign exchange implication. The word "consideration" in the said section, it was submitted, can be given no other meaning because FERA is concerned primarily with the regulation of payments, dealings in foreign exchange and securities. In my opinion, there is considerable force in this contention. FERA was enacted, as is evident from its preamble, with a view to consolidate and amend the law regulating certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and import and export of currency and bullion, for the conservation of the foreign exchange reserves of the country, and the proper utilisation thereof in the interest of the economic development of the country. The Act is, therefore, directly concerned, with the inflow and outflow of the foreign exchange into and out of the country and it is for this reason that Section 28 required the permission of the Reserve Bank before any permission could be granted for the use of the trade mark for any "direct or indirect consideration". It is only that consideration which would affect the inflow and outflow of the foreign exchange into or out of the country, whether directly or indirectly, which is contemplated by Section 28 (1 ) (c ). Any promise made by the user of the trade mark to the owner thereof which would affect or concern the flow of foreign exchange would be regarded as a consideration under Section 28 (1 ) (c) for the use of the trade mark. Where, however, permission has been granted by the owner to a registered user to do anything which affects the inflow or outflow of the foreign exchange, then such an agreement or arrangement would not come within the purview of Section 28 (1 ) (c) of FERA. In the present case, the Registered User Agreement enables the defendant to use the trade mark pioneer free of cost, and the agreement does not contain any promise on the part of the defendant to do or abstain from doing anything which has an effect on foreign exchange resources of the country. ( 27 ) I might, at this stage, refer to the letter dated 20th August, 1986 written by the defendant to the Reserve Bank of India and its reply dated 17th February, 1987, and determine as to what is the effect thereof. ( 28 ) BY the said letter dated 20th August, 1986 the defendant referred to the Reserve Bank of India s earlier letter of 28th August, 1981 and 10th July, 1985 granting the defendant permission under Section 29 (l) (a) of the Foreign Exchange Regulation Act as well as the letter dated 3rd August, 1981 whereby permission was granted to issue 40% of the equity share capital to the plaintiff and 20% of the equity capital to Dr. S. M. Sehgal. It then referred to the Government s recentlyannounced liberalisation of policies under FERA and requested the Reserve Bank of India to grant general exemption from the provisions of Sections 26 (7), 18, 29 and 31 of the Foreign Exchange Regulation Act, 1973. S. M. Sehgal. It then referred to the Government s recentlyannounced liberalisation of policies under FERA and requested the Reserve Bank of India to grant general exemption from the provisions of Sections 26 (7), 18, 29 and 31 of the Foreign Exchange Regulation Act, 1973. In response to the said letter the Reserve Bank of India granted general exemption under the aforesaid provisions of the FERA including Section 28. ( 29 ) THE perusal of Section 28 of the FERA would show that it contemplates permission being sought from the Reserve Bank of India inter alia by a non-resident. If Section 28 was applicable to the present case, then the permission ought to have been obtained by the plaintiff herein. Section 28 does not specifically contemplate permission being sought for by an Indian resident, whether an individual or an incorporated company. As such, the defendants were not obliged to seek permission under Section 28 from the Reserve Bank. Nevertheless, such a permission was sought for vide its letter dated 20th August, 1986. It is further apparent that this permission was sought for not by moving any application in the prescribed form, but by an ordinary letter. The Reserve Bank of India could have turned down the request for the exemption either by contending that the application was not in the prescribed form or by stating that it is the plaintiff which should ask for permission. The Reserve Bank of India, however, not only chose to entertain the application of the defendants, but also granted the general exemption under Sections 26 (7), 28, 29 and 31 of the FERA. The permission so granted still holds valid. It may here be noted that Section 29 requires a foreign resident to seek general or special permission from the Reserve Bank to carry on business in India or to purchase shares in India of any company or to establish a branch here. Section 31 contains restriction on acquisition and holding of immovable property in India by a non-resident except with the special permission of the Reserve Bank of India. These two provisions also, like Section 28, require permission being sought by the non-resident. In the present case, as already noted, it is the defendant which sought general permission under Sections 26 (7), 28, 29 and 31. These two provisions also, like Section 28, require permission being sought by the non-resident. In the present case, as already noted, it is the defendant which sought general permission under Sections 26 (7), 28, 29 and 31. The correspondence shows that the Reserve Bank of India was aware of the agreements which had been entered into between the plaintiff and the defendant and in a letter addressed to the defendant it accorded general permission under Sections 28, 29 and 31 an 17th February, 1987. ( 30 ) ONCE permission under Sections 28, 29 and 31 of the FERA has been sought by the defendant, and the same has been granted, it is not open, to my mind, for the defendant to turn around and contend that the Registered User Agreement is void because it required permission of the Reserve Bank of India and the same had not been granted. The Reserve Bank of India must be presumed to have known that the permission was not sought by the foreign company, but was sought by the Indian collaborator, namely, the defendant, and it still entertained the request and granted the permission which was sought for. The non-filing of the application by the non-resident, namely, the plaintiff, for the grant of exemption under Sections 28, 29 and 31 must be regarded as having been condoned by the Reserve Bank of India, and in any case, the defendant cannot challenge the validity of the permission when it had been granted at its own request. ( 31 ) IT was submitted by the learned counsel for the plaintiff that even assuming, without admitting, that Section 28 (1) (c) of the Said Act was violated when the plaintiff gave its permission to use its trade mark to the defendant, nevertheless, it was impermissible for the defendant who had taken advantage under the said Registered User Agreement, to now set up the shield of illegality and to submit that they cannot be compelled to do what they had undertaken not to do under the said contract. In support of his contention, the learned counsel referred to the provisions of Section 47 (2) of the said Act. In support of his contention, the learned counsel referred to the provisions of Section 47 (2) of the said Act. Section 47 (1), which was relied upon by the learned counsel for the defendant, provides that no person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provisions of the Act or any rule, direction or order made thereunder. Sub-section (2) of Section 47 of the said Act, which seems to minimise the impact of Section 47 (1), reads as under : "47 (2) Any provision of, or having effect under, this Act that a thing shall not be done without the permission of the Central Government or the Reserve Bank, shall not render invalid any agreement by any person to do that thing, if it is a term of the agreement that that thing shall not be done unless permission is granted by the Central Government or the Reserve Bank, as the case may be ; and it shall be an implied term of every contract governed by the law of any part of India that anything agreed to be done by any term of that contract which is prohibited to be done by or under any of the provisions of this Act except with the permission of the Central Government or the Reserve Bank, shall not be done unless such permission is granted. "sub-section (2) of Section 47 of the Act, therefore, would not make an agreement which has been entered into without having obtained the permission of the Reserve Bank of India, invalid at its inception where permission was required to be obtained from the Reserve Bank of India because the said pro- provision provides that implied in every contract would be a term to the effect that the thing shall not be done unless the permission is granted by the Central Government or the Reserve Bank, as the case may be. This provision is similar to Section 21 of the Foreign Exchange Regulation Act, 1947 which came up for consideration before the Supreme Court in M/s. Dhanrajamal Gobindram vs. Shamji Kalidas and Co. 1 In that case an agreement had been entered into which contained an arbitration clause. This provision is similar to Section 21 of the Foreign Exchange Regulation Act, 1947 which came up for consideration before the Supreme Court in M/s. Dhanrajamal Gobindram vs. Shamji Kalidas and Co. 1 In that case an agreement had been entered into which contained an arbitration clause. The agreement pertained to goods being imported and payments being made and the contention raised was that the contract was void because under Section 5 of the Foreign Exchange Regulation Act, 1947 had not been obtained. If the contract was void, there could be no valid arbitration agreement. The Supreme Court, however, negatived this contention and observed as follows : " (II) No doubt, sub-s. (1) prohibits contracts in contravention or evasion, directly or indirectly, of the Foreign Exchange Regulation Act and if there was nothing more, then the argument would be understandable. But, sub-sec. (2) provides that the condition that a thing shall not be done without the permission of the Reserve Bank shall not render an agreement invalid if it is a term of the agreement that the thing shall not be done unless permission is granted by the Central Government or the Reserve Bank and further that it shall be an implied term of every contract governed by the law of any part of India thatanything agreed to be done by any term of that contract, which cannot be done except with the permission of the Reserve Bank, shall not be done, unless permission is granted. Sub-section (3) allows legal proceedings to be brought to recover sum due as a debt, damages or otherwise, but no step shall be taken to enforce the judgment, etc. , except to the extent permitted by the Reserve Bank. (12) The effect of these provisions is to prevent the very thing which is claimed here, namely, that the Foreign Exchange Regulation Act arms persons against performance of their contracts by setting up the shield of illegality. An implied term is engrafted upon the contract of parties by the second part of Sub-sec. (2), and by sub-s. (3 ). the responsibility of obtaining the permission of the Reserve Bank before enforcing judgment, decree or order of Court, is transferred to the decree-holder. The section is perfectly plain, though perhaps it might have been worded better for which a model existed in England". (2), and by sub-s. (3 ). the responsibility of obtaining the permission of the Reserve Bank before enforcing judgment, decree or order of Court, is transferred to the decree-holder. The section is perfectly plain, though perhaps it might have been worded better for which a model existed in England". The Supreme Court upheld the contention of the respondents in that case that there was a valid and binding arbitration agreement. The ratio of the aforesaid decision is clearly applicable to the present case. The purpose of Section 47 of the Act is to preserve the sanctity of the contract which were entered into between the parties innocently and without being aware of the fact that such a contract may be in contravention of the provisions of the said Act and under which they may have obtained benefits or advantages. ( 32 ) THE Registered User Agreement contains both affirmative and negative covenants. The affirmative covenant is contained in Clause 3 which gives a right to the plaintiff relating to inspection. It is not necessary at this stage to decide whether this right can be specifically enforced or not, in view of the fact that the plaintiff is now not seeking its enforcement as an interim relief. The negative covenant, however, is contained in Clauses 4 and this can certainly be enforced. The said clause gives a right to the plaintiff to ask the defendant not to sell its seeds using the mark pioneer if it determines that the seeds have been produced by improper methods or do not conform to the plaintiff s standards and specifications. The decision by the plaintiff prohibiting the sale is, as per Clause 4, final and binding. The provisions of Section 42 of the Specific Relief Act are, therefore, clearly attracted and even though the Court may not be able to compel the specific performance of the requirements of Clause 3 of the agreement, the plaintiff would be entitled to seek the performance of the negative covenant by way of an injunction. It is, therefore, to avoid the applicability of Section 42 of the Specific Relief Act that the defendant had raised a contention that the agreement itself was void and, therefore, there would be no question of enforcement of the negative covenant. It is, therefore, to avoid the applicability of Section 42 of the Specific Relief Act that the defendant had raised a contention that the agreement itself was void and, therefore, there would be no question of enforcement of the negative covenant. It is not possible, in view of what has been held by me earlier, to come to the conclusion that the provisions of Section 28 of FERA are attracted to the present case. If the agreement is not void, as I am presently advised to hold, the provisions of Section 42 of the Specific Relief Act are clearly attracted. ( 33 ) THERE is also considerable force in the contention of the plaintiff that the defendant is estopped from contending that the Registered User Agreement is void. The said agreement was entered into in 1981 and the defendant has admittedly taken benefit thereof. It has been selling the seeds by using the trade mark pioneer . It has taken advantage under the said agreement and now when it is being alleged that the defendant is not carrying out its obligations under the said agreement, the defendant is trying to "snap his fingers at a bargain deliberately made, a bargain not in itself unfair, and which the person seeking to enforce it has a legitimate interest to enforce". (Dunhp Pneumatic Tyre Company v. Selfridge and Co. Ltd. 2 The Supreme Court in Mis. Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of Ultar Pradesh and Ors. 3 has noted the aforesaid observations of Lord Dunid in Dunlop Pneumatic case and has itself invoked and applied the principles of promissory estoppel. Where on a promise held by the defendant, in the present case, to comply with the terms laid down by the plaintiff, it has persuaded the plaintiff to allow the defendant to use the plaintiff s trade mark pioneer , the defendant is now estopped, to my mind, from contending that the agreement itself was invalid. Having enjoyed the advantages of the agreement the defendant cannot be permitted to avoid the obligations cast on it by the very agreement. ( 34 ) IT was also submitted by the learned counsel for the defendant that the suit for an injunction was not enforceable in view of the provisions of Section 14 read with Section 41 of the Specific Relief Act. ( 34 ) IT was also submitted by the learned counsel for the defendant that the suit for an injunction was not enforceable in view of the provisions of Section 14 read with Section 41 of the Specific Relief Act. It was submitted that the Court cannot specifically enforce a contract which is terminable or stands terminated. In this connection, reliance was placed on Clauses 9 and 10 of the Registered User Agreement as well as on the Supplementary Agreement entered into between the parties on 9th April, 1985. The said Clauses 9 and 10 contained in the original agreement dated 13th August, 1981 read as under: "9. This Registered User Agreement shall continue in force so long as the know how agreement between the parties remains in force. ( 10 ) UPON termination of this Agreement for any reason, USER may continue to use the Trademarks on the goods which are produced from parent seed the growing season following such termination, but for not more than eighteen months after termination of this Agreement, after which time USER agrees to discontinue any and all use of the Trademarks and not use any confusingly similar Trademark, by themselves, or in combination with any other words, symbols or designs. USER will also notify by Registered Mail all persons known to USER to be employing the Trademarks to forthwith discontinue any and all use of the Trademarks and not use any confusingly similar Trademark, by themselves, or in combination with any other words, symbols or designs. " By a Supplementary Agreement dated 9th April, 1985 Clause 9 was amended to read as under : "this Agreement shall exist and continue for a term of seven years from August 13, 1981 and thereafter will continue in force until the Technical Know-How Agreement dated July 31, 1979 remains in force. The said USER Agreement will terminate earlier if by any reason whatsoever, the said Technical Know-How Agreement dated July 31, 1979 is terminated. "a new clause was added which reads as under : "2. The present Registered User Agreement will be terminated on any one of the following acts : (a) Proposed Registered Userviolates the terms and conditions of the USER Agreement. (b) Technical Know-How Agreement dated July 31, 1979 is terminated according to the terms in Clauses 13 and 14. "a new clause was added which reads as under : "2. The present Registered User Agreement will be terminated on any one of the following acts : (a) Proposed Registered Userviolates the terms and conditions of the USER Agreement. (b) Technical Know-How Agreement dated July 31, 1979 is terminated according to the terms in Clauses 13 and 14. "it is the case of the defendant that according to the plaintiff there has been a breach on the part of the defendant "an allegation which is denied by the defendant" and, therefore, it would mean that the Registered User Agreement has been automatically terminated. ( 35 ) THE aforesaid Clause 9 makes the Registered User Agreement co-extensive with the Technical Know-How Agreement dated 31st July, 1979. It is not disputed that the Technical Know How Agreement is still in force and, therefore, the provisions of clause 9 are not attracted to the present case, and the Registered User Agreement does not stand terminated on that score. I am also unable to agree with the contention that the Registered User Agreement stands automatically terminated the moment the user violates the terms and conditions of the agreement. As I read the Supplementary Agreement, a violation by the user of the terms and conditions of the agreement would only give the plaintiff a right to terminate the agreement but there can be no automatic termination. The option of whether the agreement is to be terminated or not on account of a breach by the licence will be with the licencer and not with the licencee. It may here be noted that the case of the Registered User Agreement having been automatically terminated is not the one which was set up by the defendant in its pleadings and this contention has been raised only in the written submissions by the defendant. In this connection, reference may be made to the affidavit dated 3rd June, 1988 of Shri T. R. Sawhney field on behalf of the defendant in which he has stated that "i am advised to state that the Registered User Agreement dated 13th August, 1981 between the plaintiff and defendant No. 1 is still subsisting and has neither been terminated nor is of termination without reasonable cause the expiration of the said agreement. . . . . " ( 36 ) CLAUSE 10 of the Registered User Agreement does provide that upon termination of the Agreement the user may continue to use the trade mark for a certain period after its term ination. According to the learned counsel for the defendant this user is without any restriction. In his opinion, this is not so. The Registered User Agreement has to be read as a whole. The agreement allows the defendant to use the trade mark pioneer in respect of seeds which is produced and marketed and which conformthe standards and specifications laid down by the plaintiff. Clause 10 cannot be read in isolated and the continued user of the mark after termination of the agreement can only been respect of the seeds which correspond to the specifications laid down by the plaintiff. If defendant is able to show when clause 10 in operation that the seeds which it is marketing after the termination of the agreement, are as the specifications, then it may not be open to plaintiff to exercise its right under Clause 3 a of the agreement. If, however, the seeds are produced in the requisite manner, and are no per the specifications, then the marketing of improper the seeds would bring down the reputation of trade mark under which they are being sold and order to prevent this the plaintiff would certain be entitle to insist on the defendant desisting from using the mark pioneer in respect the substandard seeds. ( 37 ) IT was also submitted by the learned counsel for the defendant that the "permitted use" as defined under Trade and Merchandise Marks Act is relatable to the conditions of the registration certificate and not to conditions of the agreement. In this behalf, learned counsel for the defendant referred to the following passage from Kerly s Law of Trade Marks and Trade Names, Twelfth Edition, paragraph 13-28 which is as follows : "use in breach of a registered user agreement may still, under British law, be "permitted use" and presumably, therefore, not an infringement although actionable as a breach of contract. This is because our definition of "permitted use" is not dependent upon observance of the terms of the agreement, but upon observance of the conditions or restrictions upon the Register". This is because our definition of "permitted use" is not dependent upon observance of the terms of the agreement, but upon observance of the conditions or restrictions upon the Register". It was sought to be contended, while relying upon the aforesaid passage, that the alleged breach of the agreement cannot be regarded as an infringement. ( 38 ) A careful reading of the said passage will, however, show that such a breach would be "actionable as a breach of contract". The breach of a registered user agreement by the registered user may not be an infringement of the mark, but it would result in a breach of a contract and to prevent such a breach, if there is a negative covenant in the contract, then, to my mind, the said negative covenant can be specifically enforced by issuing an appropriate injunction. ( 39 ) ASSUMING for the sake of argument, that the Registered User Agreement was void, the question would still arise as to whether any relief can be granted to the plaintiff. Sections 14, 41 and 42 of the specific Relief Act refer to affirmative andnegative agreements contained in a contract. There being no contract in existence in the eyes of law, if it is assumed that the Registered User Agreement is void, the question of applicability of Sections 14, 41 and 42 of the Specific Relief Act cannot arise. Under Section 42 of the said Act an injunction is issued if there is a negative covenant in a contract. Sections 14 and 41, inter alia, deal with the specific performance of contract. If there is no contract in existence, then the said provisions of the Specific Relief Act will not apply. It was precisely in such a situation that the plaintiff can, to my mind, invoke the provisions of Order 39, rule 2 Civil Procedure Code. ( 40 ) ORDER 39, rule 2 Civil Procedure Code, inter alia, provides that in any suit for restraining the defendants from committing a breach of contract or other injury of any kind, the plaintiff may apply for a temporary injunction to restrain the defendant from committing a breach of contract or injury complained of or any breach of contract or injary of a like kind, arising out of the same contract or relating to the same property or a right. The injury which is complained of in the present case is to the improper use of trade mark belonging to the plaintiff. The plaintiff is the owner of the trade mark pioneer and, if the Registeted User Agreement is not valid, the defendant is using the said trade mark against the wishes and without a valid permission of the owner. Trade mark is a valuable right which vests in its owner, and an injunction under Order 39, Rule 2 Civil Procedure Code can be issued to prevent injury to such a right. ( 41 ) THIS a case where two parties entered into an arrangement (Registered User Agreement) where each party had its rights and obligations. The defendant says it is entitled to enjoy the benefits of the arrangement and insists on using the mark pioneer , but, at the same time. its contention is that the plaintiff is not entitled to exercise its rights flowing from the same arrangement. On the one hand, the defendant contends that the agreement was void but, at the same time, it claims liberty to continue to use the trade mark pioneer which it had, for the first time, started using by virtue of the said agreement. To my mind, the defendant cannot be permitted to blow hot and cold at the same time. It would be unjust and unfair to allow the defendant to use the mark pioneer without upholding the rights of the plaintiff contained in Clause 4 of the same agreement specially when the plaintiff has contended, and this is not specifically controverted by the defendants, that against the investment of about Rs. 3 lakhs of defendant No. 2 and his sister the plaintiffs have given funds to the defendant No. 1 to the tune of about Rs. 20. 09 crores. ( 42 ) THE right which has been given to the plaintiff under clause 4 of the agreement is absolute and unequivocal. The notice issued under Clause 4 is binding on the defendant. A Notice having been issued under Clause 4, the plaintiff is entitled to the grant of an injunction to enforce the negative covenant contained therein. ( 43 ) IT is not as if the plaintiff is, in the present case, seeking to bring the business of the defendant to a standstill. There is no injunction being sought restraining the defendant from selling the seeds produced by it. ( 43 ) IT is not as if the plaintiff is, in the present case, seeking to bring the business of the defendant to a standstill. There is no injunction being sought restraining the defendant from selling the seeds produced by it. The only relief which has been asked, at this stage, is that in view of the notice having been sent by the plaintiff, in exercise of its powers under Clause 4 of the agreement, the defendant should not sell the seeds under the mark pioneer . The defendant is at liberty to sell the seeds under any other mark so long as the same is not deceptively similar to that of the plaintiff. ( 44 ) FOR the aforesaid reasons, a temporary injunction is issued restraining the defendants, till further orders, from using the trade mark pioneer , and the trapszoid symbol. As on 12. 8. 1988 the term of the Registered User Agreement will expire and the provisions of Clause 10 will become applicable, liberty is granted to the defendant to seek variation of this order alter the report of the Local Commissioner is received. ( 45 ) THIS application is disposed of in the aforesaid terms.