SUNITA MOHAPATRA Vs. SURESH DHANUKA

JUDGEMENT

(1.) THIS appeal arises out of an order dated 22.5.2008 passed by the learned District Judge, Khurda in ARB. (P) No.576 of 2007 filed by the present respondent under Section 9 of the Arbitration and Conciliation Act, 1996 (in short, "the Act").

(2.) THE brief facts of the case are as follows : On or about 1st April, 1999 an agreement was executed between the appellant (Sunita Mohapatra) and the respondent (Suresh Dhanuka) to carry on business in the name and style of "Abhilasha". Sunita Mohapatra carries on business in the name and style of "Naturepro Biocare Inc." as the sole proprietress thereof. The said agreement was for a period of five years from 1st April, 2004 to 31st March, 2004. It was further extended on 1st April, 2004 to 31st March, 2009 by mutual consent of both the parties. As per the said agreement, it was agreed that the respondent would have sole marketing and distribution rights of the products manufactured by the appellant. The respondent would not take up marketing of any other product in the same range or in the same name "Naturoma Herbal". The names of both the respondent and the appellant would appear on the products manufactured by the appellant and sold by the respondent. While the matter stood thus, on 1st October, 2000 a deed of assignment was executed whereby the appellant (assignor) transferred in favour of the respondent (assignee) fifty per cent of the right, title and interest of trademark "Naturoma Herbal" along with proportionate goodwill of the business concerned absolutely and forever on the terms and conditions as mentioned therein on payment of consideration money to the appellant. Some of the terms and conditions of the said deed of assignment are as follows :

(3.) THE learned counsel appearing for the respondent submitted that following the terms of the agreement the appellant has purported to make sales of the products manufactured by her under the mark "Naturoma Herbal" directly in the market and has also started selling the products under the mark "Naturepro Biocare Inc." The respondent has never been involved in selling or marketing any product under the mark "Naturoma Herbal" of any other proprietor. He has also not violated the agreement. As the Trade Mark Authorities accepted the application of the parties as per the deed of assignment of the year 2000 wherein the appellant accepted the respondent as fifty per cent share holder of right, title and ownership of "Naturoma Herbal" and on the said acceptance the respondent filed an application in Form TM 16 before the Registrar of Trade Marks and has been allowed without any objection on 1st July, 2008 by the Registrar, Trade Marks accepting the proprietor of the trademark. Hence, the appellant should be injuncted from selling directly the products violating the agreement and the appellant is not entitled to terminate the contract unilaterally as his intention is bona fide and the appellant has terminated the contract after filing of the suit. He further submitted that notwithstanding anything contained in Clause -C of Section 41 of the Specific Relief Act a contract which compromises an affirmative agreement to do such an act coupled with negative agreement either express or implied not to do certain act, the circumstances that the Court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform the negative covenant. In the present case, the respondent has performed all its obligations under the agreement by incurring expenditure in promoting the said brand "Naturoma", but the appellant has violated the said agreement in selling the products directly in the market. He cited a decision of the apex Court in the case of Gujarat Bottling Co. Ltd. and others v. Coca Cola and others reported in AIR 1995 SC 2372, wherein it has been held that the restrictive covenants which are not opposed to public policy or do not impose restraint in trade are enforceable in law. He also cited a decision of the Calcutta High Court in the case of Board of Acting Governor of the La Martienere and others v. National Engineering Industries Ltd. and others reported in (2005) 2 CHN 207, wherein it has been held that against the breach of negative covenant the statutory remedy available is that of injunction under Section 42 of the Specific Relief Act, 1963 and submitted that in view of the aforesaid decisions and the provisions of the Specific Relief Act, the learned District Judge has rightly granted injunction in favour of the respondent. Therefore, the impugned order need not be interfered with in this appeal.