Competition or unlawful contractual interference

In a recent decision, the Delhi High Court dealt with the tort of unlawful interference in contractual relationships and inter alia held that the said tort has no place in India in view of Section 27 of the Indian Contract Act, 1872 (“Contract Act”).[1]

Background

The developer of a certain property at Amritsar agreed to lease the said property to the Plaintiff for fifteen years, by way of a term sheet. The Plaintiff paid a security deposit to the developer as per the term sheet and proceeded to draw up the main transaction document.

Upon learning that the Defendant (a competitor of the Plaintiff) had been pursuing the developer for the purpose of entering into an agreement with respect to the same property, the Plaintiff informed the Defendant about the term sheet executed by the developer with the Plaintiff and requested the Defendant to desist from pursuing the developer. However, the Plaintiff learnt that the developer had entered into an agreement with the Defendant with respect to the said property. Soon thereafter, the Plaintiff was informed by the developer that the term sheet stood terminated on account of the Plaintiff’s failure to execute the main transaction document within the stipulated time. The developer refunded the security deposit, which was accepted by the Plaintiff without protest. The Plaintiff alleged that (a) the Defendant induced the developer to terminate the term sheet with the Plaintiff; and (b) the Defendant had similarly attempted to interfere with transactions between the Plaintiff and developers of other properties in different cities.

The Plaintiff filed a suit against the Defendant inter alia seeking a permanent injunction to restrain the Defendant from inducing a breach of any agreement between the Plaintiff and third parties in respect of non-functional properties of the Plaintiff across India.
Continue Reading Competition or unlawful contractual interference: The line continues to remain blurred

Determinable contracts under the Specific Relief Act,1963 – Part II

In  Part I of this post, we discussed the concept of determinable contracts under the Specific Relief Act, 1963 (the “Act”) and analysed two decisions of the Supreme Court in this regard. In this post, we will examine the decisions of various High Courts which caused some confusion as to what would qualify as a determinable contract under the Act.

Delhi

As far back as 1999, the Delhi High Court found a joint venture agreement which provided for termination by either party in the event that certain government approvals were not obtained by a specified date, to be determinable in nature.[1] Conspicuously, the court did not refer to the decision of the Supreme Court in Indian Oil Corporation Ltd. v. Amritsar Gas Service & Ors.[2]

The most notable result of the lack of clarity in Amritsar Gas (supra) came by way of a decision of the Delhi High Court (Division Bench) in Rajasthan Breweries Ltd. v. The Stroh Brewery Company.[3] The agreements in this case specified certain events which would entitle each party to terminate. Observing that the facts of the case before it were identical to those in Amritsar Gas (supra), the court held that the agreements in this case were determinable and, therefore, not capable of specific performance. The court went so far as to hold that even in the absence of a specific clause enabling either party to terminate the agreement on the happening of specified events, the very nature of the agreement (being a private commercial transaction) made it liable to termination without assigning any reason by serving a reasonable notice. In the event such termination is held to be wrongful or bad in law, the only remedy available to the aggrieved party is to seek compensation for wrongful termination and not specific performance. The decision in Rajasthan Breweries (supra) was applied by the Delhi High Court in subsequent decisions.[4]
Continue Reading Determinable Contracts Under the Specific Relief Act, 1963 – Part II