IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:24.8.2010 CORAM THE HONOURABLE MR. JUSTICE C.NAGAPPAN and THE HONOURABLE MR. JUSTICE P.R.SHIVAKUMAR ORIGINAL SIDE APPEAL No. 292 of 2010 and M.P.Nos.1 and 2 of 2010 M/s. Noel Media & Advertising Pvt. Ltd., represented by its Managing Director Mr.A.Kanagaraj having registered office at 31/22, Victoria Crescent Road, Egmore, Chennai-600 008. .. Appellant Vs. M/s. Express Infrastructure Pvt. Ltd., represented by its Managing Director, No.2, Club House Road, Anna Salai, Chennai-600 002. .. Respondent Prayer: Original Side Appeal filed under order XXXVI Rule 1 of O.S.Rules r/w Clause 15 of the Letters Patent against the Order and Decree, dated 27.7.2010, made in O.A.No.742 of 2010, by the learned single Judge of this Court. For Appellant :: Mr. T.V.Ramanujan, Senior Counsel for M/s.R.Meenakshi For Respondent :: Mrs. Nalini Chidambaram Senior Counsel for M/s.Surana & Surana JUDGMENT C.NAGAPPAN, J. This Appeal is directed against the Order of a learned single Judge of this Court, dated 27.7.2010, dismissing the Application in O.A.No.742 of 2010. 2. The following facts are admitted. The appellant/applicant entered into an agreement dated 2.12.2009 with the respondent herein, by which, licence was granted to the https://hcservices.ecourts.gov.in/hcservices/ appellant to erect and install advertising sites for a minimum of 10,598 sq. ft. of advertising space within the "Express Avenue" both internally and externally for generating advertising revenue to be shared by the appellant and the respondent and the minimum guaranteed revenue of Rs.6,00,000/- was stipulated in the agreement. The duration of the agreement is for a period of five years commencing from 2.12.2009 and ending on 1.12.2014 and based on the agreement, the appellant paid a total refundable security deposit of Rs.36,00,000/- to the respondent. As per the terms of the agreement, the licensor shall get 40% of the advertisement revenue while the licensee shall get 60% of the revenue for the first year from the commencement date and for the remaining years, the licensor and licensee each should get 50% of the advertisement revenue. 3. Subsequent to the execution of the agreement, according to the appellant, additional site measuring 17,225 sq. ft. for advertising has been identified mutually by the appellant and the Authorised Representative of the respondent Mr.Avik Ghosh, in addition to the 10,598 sq. ft. and a request was made by the appellant to the respondent by letter dated 5.6.2010 to amend the agreement to the extent of additional site identified for advertising. Necessary proposal was made to take a total area of about 27,824 sq. ft. and the Authorised Representative of the respondent Mr.Avik Ghosh sent letter dated 1.7.2010 stating that he was new to organization and the documents signed by him in the past would be null and void. Apprehending that the respondent had attempted to enter into contract with the third party, the appellant sent a letter, dated 2.7.2010, suggesting reference of the dispute to an Arbitrator and also filed the application in O.A.No.742 of 2010 under Section 9(d) of Arbitration and Conciliation Act, 1996 on 2.7.2010 seeking for interim injunction restraining the respondent from doing any act prejudicial to the interest of the appellant Company resulting in violation of the terms / termination of the contract agreement dated 2.12.2009 and the amendment dated 5.6.2010 and also not to remove the existing art works, displays and advertisements erected in the "Express Avenue" at No.2, Club House Road, Mount Road, Chennai- 600 002 pending conclusion of arbitral proceedings. A learned single Judge of this Court granted an order of ad interim injunction on 5.7.2010. 4. The respondent filed Application No.3672 of 2010 to vacate the said order by stating that the arbitration notice sent by the appellant relates to the additional site of 17,225 sq. ft., in respect of which no agreement had been entered; that the application under Section 9 of the Arbitration Act had been filed for the extent of 10,598 sq.ft. covered by the contract whereas the contract itself was terminated on 3.7.2010 and that suppressing the same, ad interim order of injunction was obtained. https://hcservices.ecourts.gov.in/hcservices/ 5. The learned single Judge of this Court, after hearing both sides, held that the arbitration notice issued by the appellant, dated 2.7.2010, was in respect of additional site of 17,225 sq.ft.for which no agreement was entered into between the parties and the present application under Section 9 of the Arbitration Act was filed for the extent of 10,598 sq. ft. covered by original agreement dated 2.12.2009 which stood terminated on 3.7.2010; that the applicant was not entitled to the relief under Section 9 of the Arbitration Act since such injunction in the form of specific relief could not be granted by the Court as per Sections 14(1) and 41 of the Specific Relief Act and that it was open to the appellant to move the Arbitrator and the Arbitral Tribunal was competent to compensate the appellant for any damage caused to it and dismissed the original application. Challenging the said order, this appeal is preferred. 6. Mr. T.V.Ramanujan, learned Senior Counsel appearing for the appellant, at the outset, submitted that the appellant/applicant is restricting the prayer in the application under Section 9 of the Arbitration Act to the contract agreement dated 2.12.2009 only which is admitted and the appellant is not pressing the application in respect of additional site of 17,225 sq. ft. relying on the amendment dated 5.6.2010. The above submission is recorded. 7. It is the further contention of the learned senior counsel for the appellant that after entering into the contract dated 2.12.2009, the appellant procured orders from various clients and started executing the same. According to the appellant, it invested huge amounts in procuring the orders and purchasing the advertisement materials for timely execution of the advertising contracts of various clients and it has mobilised finance from various banks at higher rate of interest on the hope of generating sufficient revenues out of its advertising contract with the respondent. It has also erected advertising materials in the premises and any attempt to entrust the advertising contract covered under the agreement to another organization by terminating the existing one would cause irreparable loss and damage to appellant and the application was filed for the interim measure of protection in the form of an injunction pending adjudication by an Arbitrator. 8. The learned Senior Counsel appearing for the appellant submitted that the conclusion of the learned single Judge that the suit agreement cannot be specifically enforced as per Section 14(1) of the Specific Relief Act and the injunction sought for cannot be granted to prevent the breach of the contract, the performance of which would not be specifically enforced as stipulated under Section 41(e) of the said Act, is erroneous and unsustainable in law. It is the further contention of the learned Senior Counsel appearing for the appellant that the specific performance of the subject matter of the agreement may be enforced since it falls under Clause https://hcservices.ecourts.gov.in/hcservices/ (c) of sub-section 3 to Section 14 of the said Act but however the issue is debatable and has to be decided only by the Arbitrator. It is his further contention that the present contract comprises an affirmative agreement to erect and install advertising sites coupled with a negative agreement in the form of exclusivity to the appellant and under Section 42 of the said Act, though specific performance of the agreement cannot be compelled, it shall not preclude to grant an injunction to perform the negative agreement. The learned senior counsel, however, hastens to add that the question whether Section 41 or Section 42 of the said Act is applicable is a triable issue to be decided by the Arbitrator. 9. Per contra, Mrs.Nalini Chidambaram, learned Senior Counsel appearing for the respondent, contended that the present agreement could not be specifically enforced and the alleged loss due to breach of the same could always be quantified in monetary terms; that compensation in terms of money would be more than adequate; that passing an order of injunction would tantamount to enforcing a specific performance of the contract which involves the performance of a continuous duty by both parties and more so when the appellant itself has violated the terms of the agreement and that the provisions under Sections 14(1) and 41(e) of the said Act are squarely applicable. 10. Admittedly, the present agreement contains an arbitration clause. Whether the agreement dated 2.12.2009 can be specifically enforced is a matter to be decided in the arbitral proceedings. That will not fetter the grant of interim measure of protection under Section 9 of the Arbitration Act. The right conferred by Section 9 of the said Act, cannot be said to be one arising out of a contract. [See FIRM ASHOK TRADERS VS. GURUMUKH DAS SALUJA (2004) 3 SCC 155]. The qualification for invoking the jurisdiction of this Court under Section 9, is that the person who is invoking it must be a party to an Arbitration agreement. This Court under Section 9 of the said Act is only formulating interim measures so as to protect the right under adjudication before the Arbitral Tribunal from being frustrated. Hence the conclusion of the learned single Judge that the order of injunction sought for under Section 9 of the Act would amount to granting of specific relief and such injunction cannot be granted as per Sections 14(1) and 41(e) of the Specific Relief Act, is erroneous and cannot be sustained. 11. The learned Senior Counsel for the respondent further pointed out that no notice invoking the arbitration clause in the agreement dated 2.12.2009 pertaining to 10,598 sq. ft. was issued to the respondent before filing the application under Section 9 of the Arbitration Act. This contention is devoid of merit. The Supreme Court, in the https://hcservices.ecourts.gov.in/hcservices/ decision in M/s. SUNDARAM FINANCE LTD., VS. M/S. NEPC INDIA LTD., (AIR 1999 SC 565), has laid down that in order to give full effect to the words "before or during arbitral proceedings" occurring in Section 9, it would not be necessary that a notice invoking the arbitration clause must be issued to the opposite party before an application under Section 9 can be filed. 12. However, it is the further contention of the learned Senior Counsel appearing for the respondent that the appellant herein subsequently has also filed a civil suit to set aside the letter of termination dated 3.7.2010 and hence there is no intention on the part of the appellant to take recourse to arbitral proceedings and it is not entitled for the interim measure of protection provided under Section 9 of the Act. In reply, the learned senior counsel appearing for the appellant drew our attention to the letters dated 8.7.2010 and 15.7.2010 written by the appellant. In the letter dated 8.7.2010 the appellant, besides informing that an interim injunction was obtained from this Court, has also stated that they have already invoked the arbitration clause in their communication dated 2.7.2010. In clause 16 of the second letter dated 15.7.2010, the appellant has referred to their earlier letter dated 8.7.2010 seeking appointment of an Arbitrator. The learned senior counsel appearing for the respondent objected to those two letters by stating that they came into being after filing of the Original Application under Section 9 of the Arbitration and Conciliation Act and they are being filed only in the appeal now. No doubt the said letters dated 8.7.2010 and 15.7.2010 written by the appellant to the respondent came into being subsequently after filing of the Original Application. But the contention that there was no intention on the part of the appellant to take recourse to arbitral proceedings insofar as the extent of 10,598 sq.ft. of advertising space covered by the original agreement since the agreement itself came to be terminated only subsequent to the filing of the original application, is devoid of merit for the reason that the relief sought for in the original application covers the entire area. 13. The original application under Section 9 of the Arbitration Act was filed on 2.7.2010, ad interim injunction was granted on 5.7.2010 and the said application was dismissed on 27.7.2010 by the learned single Judge of this Court. Thereafter, the appellant herein filed a civil suit on 29.7.2010 in O.S.No.7418 of 2010, on the file of City Civil Court, Chennai. A copy of the plaint in the suit is found in the typed set filed by the respondent and in the averments therein, the filing of the original application under Section 9 of the Arbitration Act and its dismissal are mentioned. The respondent herein filed I.A.No.13982 of 2010 in the said suit under Section 8(1) read with Section 5 of the Arbitration and Conciliation Act, 1996 and has sought for referring the parties to arbitration as per the arbitration agreement dated 2.12.2009. The https://hcservices.ecourts.gov.in/hcservices/ learned Senior Counsel appearing for the appellant also submitted that the appellant is going to withdraw the said civil suit. Hence we do not deem it proper to dismiss the application under Section 9 of the Arbitration Act for this reason alone. 14. Having been satisfied that there exists a valid arbitration agreement and the Court has jurisdiction to pass order under Section 9 of the Arbitration and Conciliation Act giving interim protection, it is always open to this Court to pass a conditional order to put the appellant to such terms as deemed fit with a view to see that effective steps are taken by the appellant for commencing the arbitral proceedings. 15. The learned Senior Counsel appearing for the appellant submitted that the appellant invested huge amount in procuring the orders and purchasing materials for execution of the advertising contract with his clients and it also mobilised finance from various banks and third party's interest have intervened; that the Advocate Commissioner's report and the photographs taken by him would show the work done by the appellant; that the respondent without notice to the appellant has removed certain materials belonging to the appellant and kept them in the passage lying open to sky and that the conduct of the respondent is not equitable and interim measure of protection of the preservation of the goods belonging to the appellant has to be given by way of grant of interim injunction. 16. Per contra, the learned Senior Counsel appearing for the respondent, submitted that after the dismissal of the injunction petition, the respondent requested the appellant to remove the boards and since it has failed to do so, as per paragraph 3 of clause 4 of the agreement, the respondent removed them and safely stored them in the basement of the Mall and that the respondent was forced to terminate the agreement due to serious breach committed by the appellant as mentioned in the termination letter. 17. While hearing the appeal, this Court appointed an Advocate Commissioner by order dated 16.8.2010 to visit the premises and find out the factual position as to the advertisement materials belonging to the appellant and file a report by 18.8.2010. Accordingly the Advocate Commissioner filed his report dated 18.8.2010 along with 79 photographs taken using digital camera. In the report, he has classified the materials inspected by him into three heads viz., (i) materials continued to be affixed to the building; (ii) materials removed and kept by the respondent and (iii) materials in the custody of the appellant. The details of various materials inspected by him and identified by parties were set out in the report. The materials continued to be affixed to the building are mainly scaffoldings attached to the building at various places in the premises. The materials removed and kept https://hcservices.ecourts.gov.in/hcservices/ by the respondent are mainly advertisement banners and supporting materials. The learned Senior Counsel appearing for the appellant submitted that the removed advertisement banners can be restored. In the report, the Advocate Commissioner has stated that side portions of the banners were found to be torn and they have been photographed. 18. Immediately after the dismissal of the injunction petition on 27.7.2010, the respondent herein started removing the advertisement materials belonging to the appellant in anticipation of preferring an appeal by them. As per the Commissioner's Report, part of the materials have been removed and kept by the respondent. Considering the hasty act of the respondent in dismantling the advertisement materials, this Court deems it fit to protect the interest of the appellant herein pending arbitral proceedings by restoring status quo ante so far as the advertisement space of 10,598 sq.ft., covered by the original agreement is concerned. The details as to how status quo ante is to be restored are indicated as follows : (1) The advertisement materials belonging to the appellant, dismantled and kept in the custody of the respondent, shall be handed-over to the appellant. (2) The appellant is permitted to restore the dismantled portion of the advertisement banners to their original frame at its cost. (3) There shall be an order of injunction against the respondent not to remove advertisement materials thereafter pending conclusion of arbitral proceedings. We also deem it appropriate to direct the appellant to take effective steps to commence the arbitral proceedings. In the result, the Original Side Appeal is allowed and the order dated 27.7.2010 made in O.A.NO.742 of 2010 is set aside and the Original Application is disposed of on the terms indicated above. There shall be no order as to costs. Consequently, connected M.P.s are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ vks To The Sub Assistant Registrar, Original Side, High Court, Madras. 1 cc To M/s.V.J.Latha, Advocate, SR.62289. 3 cc To M/s.Surana & Surana, Advocate, SR.62333, 60351. O.S.A.No. 292 of 2010 and M.P.Nos.1 and 2 of 2010 PKB(CO) SRA 24.08.2010 https://hcservices.ecourts.gov.in/hcservices/