JUDGMENT
The appeal arises out of the rejection of the interim order sought for on IA 1 in OS 5906/2013 by the City Civil Court, Bangalore. The prayer in the suit filed by the plaintiff/Nike India Ltd. is for declaring the contract between the parties with effect from 1.8.2008 at Document 3 to the plaint stands duly extended till 31.07.2014 vide the plaintiffs communication dated *30.5.2013 in terms of clause 8(a) of the Contract and issue a permanent injunction restraining the defendant or any one claiming through or under him from soliciting, negotiating or entering into any agreement with any third party with respect to the endorsements/service covered by the contract between the parties with effect from 1.8.2008 or from in any manner taking any action inconsistent with the endorsement of the plaintiffs products. Simultaneously, IA 1/2013 is also filed seeking for injunction. However, the trial court declined to grant any interim injunction. Hence, this appeal. * Corrected vide order dated 25.9.2013
The facts are: The plaintiff/appellant - Nike India Pvt. Ltd. entered into a contract with the defendant/respondent - Mr. Virat Kohli titled Cricket Consultant Contract for the period from 1.1.2007 to 31.12.2009, During pendency of the said contract, the parties entered into a fresh contract for the period 1.8.2008 to 31.7.2013 subject to the right of the appellant to extend the same for a period of 1 year. The said contract, according to the appellant, mteralia provided for grant of endorsement rights to the appellant on an exclusive basis in connection with its products as indicated therein and paid the respondent substantial sum of money. It is stated, appellants have adhered to its contractual obligations without any default and the respondent has been fully satisfied with the terms of the contract and the performance thereof of the appellant and has repeatedly applauded the products publicly.
Clause 8 of the contract provided that NIKE shall have the option to extend this contract for one additional contract year after the expiration of the contract period, upon the same terms and conditions applying in the final contract year of the initial contract period, exercisable by giving written notice of such election to the Consultant not later than sixty days before the expiration of the initial contract period, It also provided that at NIKE's request, Consultant shall negotiate with NIKE in good faith with respect to the terms of a renwal of this contract. The parties shall not be obligated to enter into an agreement if they cannot settle on mutually satisfactory terms. The Consultant shall not engage in discussions or negotiations with any third party regarding Consultant's wearing, sponsoring, promoting, advertising or endorsing or providing consulting or similar services with respect to, any products after the contract period until sixty days prior to the expiration of the contract. According to the appellant, it being desirous of extending the contract for a period of additional year i.e, from 1.8.2013 to 31.7.2014 pursuant to clause 8(a), duly communicated on 30.5.2013 intimating the respondent of the exercise of its option pursuant thereto and offered to negotiate with the respondent for further renewal of the contract beyond 31.7.2014 However, since the appellant has not accepted the unilateral and unreasonable terms by the respondent for further renewal of the contract as suggested by him, respondent issued a communication on 10.6.2013 making baseless allegations with respect to implementation of the contract and rejected the appellant's extension of the contract vide its letter dated 30.5.2013 According to the appellant, the respondent has no right or basis in this regard and is bound by the extension as per the terms of the contract. It is stated, the respondent is precluded from entering into any negotiation with any third party with respect to the products or services contemplated under the Contract.
It is the contention of the appellant that contract has been duly extended for a period of one year and the respondent is duty bound to act in accordance thereof without in anymanner circumventing the appellant and entering into any negotiations and contracts with third parties. If the respondent entered into any third party agreement, the same would render the contract between the parties infructuous and vitiate the vested rights of the appellant as also cause public embarrassment and wastge of its material resources towards royalty, advertising, etc., as well as undermine the brand of the appellant if the rival brand is endorsed and the same cannot be compensated in terms of money. As per clause 12 (c) (4) of the contract, respondent has agreed not to take any action inconsistent with the endorsement of the appellant's products which precludes him from making any disparaging remarks in respect thereof. It is also their case, the respondent has threatened to disparage the brand of the appellant by baseless averments made in the communication made by him on 10.6.2013 As such, a suit came to be filed for declaring that the contract dated 1.8.2008 stood extended till 31.7.2014 vide plaintiffs communication dated *30.5.2013 as per clause 8(a) of the contract and an injunction restraining the respondent or anyone claiming through or under him from soliciting, negotiating or entering into any agreement with any third party with respect to the endorsements/services covered by the contract between the parties with effect from 1.8.2008 Accordingly, appellant sought for an injunction which came to be rejected. As such, this appeal on various grounds.
On the appeal filed, after ordering emergent notice by order dated 20.8.2013, this court has ordered to maintain statusquo for a period of four weeks. Against the order of statusquo, while filing objections respondent * Corrected vide order dated 25.9.2013 has also filed IA under O 39 R 4 r/w S. 151, CPC seeking for vacating the stay and also seking for dismissal of the IA filed by the appellant seeking temporary injunction.
Another application is filed by the appellant to initiate action stating that the order of status-quo has been defied by the respondent. An application is also filed under O 39 R 2(A) r/w S 151, CPC to find the accused guilty of the act of commission of contempt of disobeying the order passed by this Court on 20.8.2013 and to take action as per the provisions of O 39 R 2(A), CPC.
In the affidavit filed by the respondent it is contended, the trial court rightly refused to grant exparte injunction on the IA filed by the appellant under O 39 R 1 and 2 and it is submitted, on 20.8.2013 this Court has passed an exparte order directing to maintain status quo for a period of four weeks and as such, he is praying for setting aside the order dated 20.8.2013 stating that the cricket contract stood terminated by the termination letter and he is free to negotiate with third parties or any other sponsor. On 14.8.2013, he had executed a Term Sheet with another brand/company and the same stands as on date of the statusquo order passed by this Court. The suit and the appeal have become infructuous and are liable to be dismissed. The appellant has admitted that if the respondent has entered intoany third party agreements, the same would render the Cricket Contract entered into between the parties, infructuous. Upon rightful termination of the Cricket Contract and rejection of the unilateral extension of the contract, he has rightly executed the Term Sheet with another brand/company. While denying any violation, it is submitted the appeal and the application filed by the appellant deserves to be dismissed and accordingly, sought for vacating the order dated 20.8.2013 directing to maintain statusquo for a period of four weeks.
It transpires, the terms of the contract between the plaintiff and the defendant which is made available at document 3 specifically provides for some clauses. At the inception, the nature of contract advanced is with reference to Mr. Virat Kohli to use NIKE products i.e, NIKE personal services and expertise in the sport of cricket and his endorsement and use of NIKE products. The contract period shall be from 1.8.2003 to 31.7.2013 subject to right of extension by the appellant and subject to condition unless extended in accordance with the para 8 of the Standard Terms and also three clauses are provided i.e, a, b, c in the personal services and use of NIKE products. It is specifically provided that the Consultant shall wear and use exclusively NIKE equipment including cricket bats, foot wear and apparel, accessories in accordance with para 2 of the Standard Terms. One of the terms of Contract regarding termination is clause 10 of the Standard Terms wherein it is provided that the Consultant shall *have the right to terminate the contract immediately upon written notice to NIKE if NIKE is in material breach of the contract and fails to cure such breach within thirty days following NIKE's receipt of written notice from Consultant of such breach. So also NIKE has also right to terminate the contract immediately upon written notice to the Consultant.
Now the lis between parties is with respect to extending the term from 1.8.2013 till the end of 31.7.2014 Alleging that this contract entered into between the parties on 1.8.2008 is operating beyond five years and as * Corrected vide order dated 25.9.2013 per the terms the amount also is fixed, it is argued by the appellant's counsel that as on the day the Consultant entered into contract with the appellant he was hardly 19 years old and he has earned Rs. 1.42 crores in a period of five years. As per the terms of the contract, it could be extended for one more year as such, during the extended period as is agreed by the Consultant, there is violation and he was also endorsing other brand/company products thereby he has committed breech of contract. It is also stated, from 1.8.2013 to 31.7.2014 the contract is continued and there is no termination of this contract and the offer made by the consultant in an exorbitant sum is uncalled for and the many proposals which he has received from other companies is also unconscionable. It is also stated the Consultant tried to display some other products by wearing them and it is also in violation of terms of the contract much less the order of status-quo Accordingly, he has sought for allowing the appeal and to declare that the contract is extended by terms of the agreement and that it is totally against the restraint under S.27 of the Contract Act and S.42 of the Specific Relief Act, the conduct of the Consultant cannot be condoned and he is liable for defying the order of this Court to maintain status-quo. In this regard, counsel has relied upon several decisions of the Apex Court, Delhi High Court and Gujarat High Court.
1989 Supp (1) SCC 487- Provash Chandra Dalui v. Biswanath Banerjee
1981 ILR Del 62 - Union of India v. Rampur Distellery & Chemical Co. Ltd.
(1995) 5 SCC 545 - Gujarat Bottling Co. Ltd. v. Coca Cola
2003 26 PTC 186 (Del) - Chancellor Masters & Scholars of the University of Oxford - Orient Longman Pvt. Ltd.
2007 (2) Arb. LR 133 (Del) - Modi Rubber Ltd.… v. Guardian International Corp.…. Corporation
2008 (4) Arb LR 12 (Del) - BLB Institute of Financial Markets Ltd. v. Ramakar Jha
2007 (5) Bom CR 207- Dirk India Pvt. Ltd. v. Mahagenco
AIR 1996 Cal 67- Vijaya Minerals Pvt. Ltd. v. Bikash Chandra Deb
(2011) EWCA Civ. 668- Vefa Ibrahim Araci v. Kieren Fallon
AIR 1967 SC 1098 - Niranjan Shankar Golikari v. Century Spinning & Mfg. Co. Ltd.
(1989) 2 SCC 163 - ABC Laminart Pvt. Ltd. v. A P Agencies, Salem
2010 (3) CTC 773 - Rajendran Chinaravelu v. R K Mishra, Addl. Commr. of IT
1985 Kerala LJ 690 - Koru Gopatakrishnan v. K.S Sarojini
(2006) 5 SCC 282Seeria Arshad Zaheer v. Municipal Corporation of Greater Mumbai
Counsel for the respondent in the statement of objections filed for vacating the stay, has stated that there is no violation of the terms of contract and by issuing one month's notice as per the terms of the contract, rhe contract is terminated. Apart from that, whatever is demonstrated by the appellant by way of photograph does not demonstrate the exact violation of the stats quo order of this Court. Though the Consultant had ordered for supplying good pair of shoes for his performance, as per the contract, despite notice and despite lapse of 4 - 5 weeks, NIKE did not oblige nor responded and the shoes sent were all of right foot and not properly fitting.
As regards the provisions under S.27 of the Contract Act and 42 of the Specific Relief Act, it is the submission of the appellant's counsel that though it is in the form of a negative covenant against the Consultant, it is enforceable and in support of his contention relied upon some decisions.
Counsel for ther respondent has also relied upon the following decisions in support of his case.
(2006) 4 SCC 227-Percept D'Mark (India) (P) Ltd. v. Zaheer Khan
(1991) 3 SCC 54 - Nandganj Sihori Sugar Co. Ltd, Rae Bareli v. Badrinath Dixit
(2008) 8 SCC 92 - State Bank of India v. S N Goyal
(1972) 1 SCC 623 - Shri Vidya Ram Misra v. Managing Committee, Shri Jai Narain College
(1971) 2 SCC 192- Indian Airlines Corporation v. Sukhdeo Rai†.
(1993) 3 SCC 161 - Shiv Kumar Chaddha v. Municipal Corpn. of Delhi
ILR 1989 KAR 1701 - Sri Gowrishankara Swamigalu v. Sri Siddaganga Mutt
It is his submission, as per clause 10 (a) (iii) of the Contract, the respondent has finaly terminated the contract for not supplying the shoes. What has been supplied is not as per requirement. Even the appellant is due in a sum of Rs. 20 lakhs to the Consultant. There is no reply to the letter of *June 10th, 2013 by the appellant and the suit itself is not maintainable. Further, relying upon the decision in Percept D Mark's case cited above, particularly paragraphs 44, 56, 62 and 68, it is contended that personal services cannot be enforced.
In the case on hand, the document i.e, document 3 itself provides for termination of contract. On the other hand, as is contended by the appellant's counsel, the contract is enforceable and is binding on the Consultant. Further, according to the Sr. Counsel representing the respondent, the judgments referred and relied upon by the appellant's counsel in Provash Chandra Dalui's case is with respect to lease of premises and not in respect of personal services. In Rampur Distillery's case, as difference of opinion was expressed by two Benches, matter was referred to the Chief Justice to form an opinion and for decision by the * Corrected vide order dated 25.9.2013 larger Bench. The judgment in Gujarat Bottling Co. Ltd's case is with regard to terms of production and breach of contract and it is not in respect of personal services and the judgment in Chancellor Masters & Scholars of the University of Oxford's case relied by the counsel is in respect of Copyright Act and the other decisions relied on by the counsel are of course with respect to the terms of general contract and regarding restraint and what is provided under S.42 of the Specific Relief Act.
In para 14 of the judgment in Provash Chandra's case cited above, referring to Black's Law Dictionary the words ‘extension’ and ‘renewal’ have been distinguished. According to the Black's Dictionaiy, ‘extension’ means thecontinued existence of something to be extended and ‘renewal’ is chiefly that in the case of renewal, a new lease is required, while in the case of extension the same lease continues to be in force during the additional period by the performance of the stipulated act.
As per document 3, there is a clause provided for termination of contract under which if there is no reply or on expiry of the five years period or during the existence of that period, by one month's notice such a contract would be terminated. In that view of the matter, this termination of contract would ratherprove that at the instance of the Consultant there is no continuation for which he has agreed and there is also an option given to him to exercise his right and rather when there is better offer offered, necessarily he has every right to demand for enhancement and he need not be bound by the terms as provided in the earlier agreement as S.27 of the Contract Act saves the situation and it leans in favour of the Consultant. Further, in this regard when he has written to the appellant for which there is no reply by the appellant, then there is no such breach much less continuity to provide for the sixth year at the old rate as is quoted. Further more, as per the ratio laid down in various decisions by the Apex court, the contract which is entered into between the plaintiff and the defendant is shown to have been terminated by the act of the Consultant i.e, by letter dated *June, 10 2013. Though a catena of decisions are cited as regards enforcement of negative covenant/personal services contract, in my view, the same cannot be enforced as it is against public policy and unreasonable. This is also supported by the view taken in the case of Percept D'Mark * Corrected vide order dated 25.9.2013 (India) Pvt. Ltd. Apart from that, any such photographs which were shown before this Court do not exactly depict the violation of the status-quo order i.e, to say, the situation prevailing as on the date of status-quo is to be maintained and not that of the terms of the contract. In my view, there is no such violation committed by the respondent herein. The IA filed for vacating the status quo order is allowed. Status quo granted till the expiry of four weeks is vacated. As regards the order of status-quo passed, it has to be clarified to mean only to maintain what was on the date of granting such an order. Since even before granting an order already the contract was terminated by the Consultant, question of enforcing the old terms terms of contract does not arise as it is unreasonable. There is no balance of convenience and irreparable injury caused to appellant much less there is no prima facie case in the fact situation made out by the appellant. Granting an interim order amounts to enforcement of personal services which is contrary to public policy and amounts to bonded labout. I A filed for ad-interim injunction is also rejected.
Appeal is disposed of.
The prayer to maintain status-quo till the appellant approaches the Supreme Court is rejected.
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