Annual Arbitration Review 2018

Parsoli Motors Works Private Limited v BMW India Private Limited

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Judgment: Parsoli Motors Works Private Limited v BMW India Private Limited

 

Citation: 2018 SCC OnLine Del 6556

 

Court: Delhi High Court

 

Coram: C. Hari Shankar

 

Date: January 15, 2018

 

Overview: This Delhi High Court cases looks into whether a Court is empowered to grant injunctions contrary to the provisions of the Specific Relief Act. Please write the overview

 

Issue: Whether a court can grant injunction u/s 9 of the Act contrary to the provisions of the Specific Relief Act?

 

Factual Background:

Please write the name of the parties and put respondent and petitioner in the brackets) BMW India Private Limited(“Respondent”) entered into an agreement with Parsoli Motors Work Private Limited (“Petitioner”) to sell BMW cars in the state of Gujarat. The agreement was renewed for some years, but it was terminated at the end of 2017 with a three weeks’ notice. The Petitioner made the claim that the three weeks’ notice was an insufficient period to allow the Petitioner to transition from this business to another.  In these circumstances, the Petitioner filed a section 9 application to be given 9-10 months to exit from its relationship with the Respondent.

 

The Respondent drew the Court’s attention to the sections 38 and 39 of the Specific Relief Act[1](cite these section) to say that as the appellant had no legal right to have the agreement renewed there could not be any grant of injunction.

 

Analysis:

After relying on cases such as Arvind Constructions Ltd. v Klainga Mining Corporation[2](cite), Firm Ashok Traders v Gurmukh Das Saluja[3](citation),Reliance Infco v BNSL[4]& Gujarat Bottling Company v Coca Cola[5](citation), the court held that the power to grant injunctive relief, u/s 9 of the Act, has to be in accordance with the provisions of the Specific Relief Act.

 

An injunction which cannot be granted u/s 41 (cite) of the Specific Relief Act[6], cannot be granted u/s 9[7](cite) of the Act either. Neither can relief be granted u/s 9, as that would amount to specific enforcement of a contract which, by nature, is determinable in view of section 41 of the Specific Relief Act.

 

The power to grant injunctive relief, u/s 9 of the Act, is essentially intended to protect the subject matter of the contract and to avoid frustration of arbitral proceedings, which may be initiated with respect thereto. Such relief can be granted only if the three pre-requisites, governing grant of injunctive relief, i.e. existence of a prima facie case, balance of convenience being in favour of the claimant and possibility of irreparable loss that would ensue to the claimant were such relief not granted, stand fully satisfied. Even in cases where a contract is being sought to be terminated, in violation of the terms thereof, if it appears that the party who suffers as a result of such termination could be adequately compensated in terms of money at the stage of final adjudication of the dispute, no injunctive relief, u/s9 of the Act, would be granted.

 

 

Conclusion:

Court cannot grant an injunction u/s 9 of the Act contrary to the provisions of the Specific Relief Act.

[1]Specific Relief Act Section 38 & 39

[2](2007) 6 SCC 798

[3](2004) 3 SCC 155

[4](2008) 10 SCC 535

[5](1995) 5 SCC 545

[6]Specific Relief Act Setion 41

[7]Arbitration & Conciliation Act, 1996 Section 9

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