Vinod K.Sharma vs 39 The Learned Counsel For The

O.A.No.116 of 2013:

This application under Order XIV Rule 8 of O.S. Rules read with section 9(ii)(d)(e) of the Arbitration and Conciliation Act, has been filed for grant of interim injunction restraining the respondent, their agents, servants, collaborators, partners, associates or agreement holders wherever they be located or based other than the applicant from assembling, manufacturing, importing, marketing, selling or in any manner dealing with Wind Turbines/Wind Turbine Generators or its components/sub assembles and parts within the territory of India other than through the applicant pending arbitration proceedings.

O.A.No.117 of 2013:

This application under Order XIV Rule 8 of O.S. Rules read with section 9(ii)(d)(e) of the Arbitration and Conciliation Act, has been filed for grant of interim injunction restraining the respondent, their agents, servants, collaborators, partners, associates or agreement holders from violating the Collaboration agreement signed between the applicant and the respondent on 21.2.2012 by applying for or securing a C-WET license.

2 In support of these applications, it is pleaded that M/s.Vyuvidyut Projects Private Ltd./applicant is a company registered under the Companies Act, 1956 having its registered office at No.5, Third Floor, New Creation Building, 130-C, D.H.Road, Joka, Kolkata. The applicant has a liasion office in Chennai situated at No.15, First Floor, Above Silver Sky Super Market, Gangai Amman Koil Street, Kodambakkam, Chennai.

3 Whereas the respondent is a company incorporated in China and engaged in the manufacture, sale and trading of Wind Turbine Generators (WTGs), its components and parts.

4 The respondent entered into a Collaboration Agreement with the applicant on 21.2.2012 appointing the applicant as their sole and exclusive Indian Partner for the purpose of manufacturing and assembly of components of Wind Turbines in line with the C-WET and RLMM guidelines in India.

5 The applicant was also granted the sole and exclusive rights within the territory of India to set up a facility for the manufacture and sub-assembly of all current and future models/ products and components of the respondent.

6 In addition, applicant was granted exclusive rights to set up the facility for sub-contract and sub-assembly of all models/ products and components of the second respondent and for applying for certification by C-WET for the model W-2000 belonging to the respondent and all other models of the respondent, existing or to be manufactured or brought out by the respondent in future within the territory of India for an inflexible period of 10 years for which the respondent undertook to provide all the infrastructural requirements for the facility and to support the applicant in many other ways.

7 It was expressly provided in the Collaboration agreement that the applicant would not involve itself with any other Wind Turbine manufacturer other than the respondent, and in turn, the respondent agreed to work exclusively with the applicant for the manufacture, sale, as also the Certification by CWET and inclusion in RLMM of its Wind Turbines in respect of all their current models under introduction or to be introduced subsequently during the tenure of the agreement.

8 As already noticed above, the agreement was for an initial and irrevocable period of 10 years from the date of signing the collaboration agreement, subsequently extendable by another 3 years by mutual agreement.

9 Clause 2.1, 2.2 and 6.6 of the Collaboration agreement read as under:

2.1 Role of Indian Partner:

Set up a facility for subcontract and sub assembly of components of SEWIND WTGs, as per SEWIND defined standards. Location of the facility shall be in Tamilnadu/Pondicherry as approved by SEWIND at its own cost.

Employ technical staff and labour, as recommended by SEWIND, in the facility, with appropriate skills and keep them trained by SEWIND to meet the process standards.

Get the facility certified under CWET (Centre for Wind Energy Testing), ISO 9001 for W2000 and any other model and other relevant approvals and certifications and keep the Facility operational in compliance with these standards at its own cost.

Ensure and allow participation of SEWIND engineers in controlling/directing the manufacturing process to meet the requirements of SEWIND. Ensure access of SEWIND engineers/ staff/ representative to the Facility at all times, including allowing movement of equipment/ components/ material in and out of the facility as per instructions from designated SEWIND Manager responsible for the facility.

Facilitate and allow periodic audits of the facility by SEWIND, SEWIND clients, CWET, etc. for assuring that the process of manufacture is in line with agreed standards.

Provide storage space for SEWIND spares and develop an All-India team of service and support engineers in order to render after sales support to SEWIND clients all over India in line with SEWIND standards.

Keep the equipment/components/material supplied by SEWIND safe and secure and take appropriate measures including insurance for securing of such equipment/components/material till the equipment/components/material move out of the facility for delivery.

2.2 Role of SEWIND Provide infrastructure requirement of the facility to support the Indian Partner to set up the Facility.

Provide adequate training to the staff of the Facility to meet SEWIND standards.

Provide the requirements of number and qualification for the staff & labor to be employed by Indian Partner for the Facility.

Carry out regular audits of the process at the Facility as per agreed intervals and norms.

Station appropriate staff at the Facility.

Designate a Manager for the Facility, who will have powers and authority to ensure Quality Assurance by the Facility, control Material Movement in and out of the Facility and ensure that agreed standards by the Facility are met.

"6.6 Indian Partner agrees not to involve itself with any other WTG Manufacturer other than SEWIND and SEWIND agrees to work exclusively with Indian Partner for the Manufacture and sales of all its WTG models in India under introduction and to be introduced subsequently during the tenure of this agreement."

10 It is submitted that for the purpose of sale and related manufacture or import of WTGs or its components or parts and for the assembly or manufacture thereof a license from the Centre for Wind Energy Technology (normally known as C-WET) is mandatory. C-WET was established in Chennai in the year 1988. One of the primary duties of C-WET is the maintenance of a standard and certification unit which carries out provisional type Certification of Wind Turbines as per the Indian Certification Scheme for Wind Turbines. The C-Wet provides certification services for preparation of issuance of a Revised List of Models and manufacturers of Wind Turbines periodically. The sale and related manufacturing, importing or assembling and trading of Wind Turbines cannot be engaged into within the territory of India without due certification by CWET and without being included in the RLMM list. That C-WET is responsible for approving the operation in India of any Wind Turbine Generator or any parts required for the sale and related manufacture or assembling of Wind Turbines and a sine qua non for the grant of such approval is the maintenance of a manufacturing facility in India, whether the facility is used for manufacture of Wind Turbines or for assembling the components of the Wind Turbines imported for that purpose.

11 According to the Collaboration agreement, the applicant took all steps required for C-WET certification and inclusion in RLMM, and applied for C-WET license with C-WET. The respondent had issued a certificate on 11.4.2012 to the applicant confirming their long term agreement and Collaboration with the applicant and requested the applicant to submit the same for securing C-WET license.

12 The respondent on various occasions and in writing confirmed the exclusive right of the applicant to apply for C-WET certification with C-WET for all their current and future products for an inflexible and irrevocable period of 10 years from 21.2.2012 and for an additional period of three years on a mutually agreed basis.

13 Although the applicant complied with all the primary requirements needed for securing the C-WET licence, the respondent failed to provide the necessary Technical and infrastructural support agreed upon and which was prerequisites for the certification of the applicant's manufacturing facility by C-WET.

14 Vide letter dated 19.4.2012, C-WET informed the applicant that it was postponing considering the applicant for processing of Certification or inclusion in RLMM on account of Technical and informational inadequacy directly attributable to the respondent. The certification process was not undertaken for the applicant on the sole ground that the respondent was unable to furnish the obligatory certificational information.

15 However, C-WET directed the applicant to re-apply for the certification with the necessary information and documents to be supplied to the applicant by the respondent.

16 While serious efforts were taken by the applicant to convince the respondent to provide infrastructural requirements for the Indian facility as agreed to in clause 2.2 of the Collaboration agreement, dated 21.2.2012, it was reliably learnt, that the respondent was surreptitiously attempting to find other collaborators to undertake manufacturing and assembly in India in violation of the collaboration agreement.

17 This action on the part of the respondent was in gross and material breach of the terms of the collaboration agreement which resulted in a strained relation between the parties. Therefore, to resolve the differences, several rounds of discussions were held between the parties at Calcutta and Chennai.

18 The case of the applicant is that since the C-WET certification was to be secured from Chennai and the facility of the applicant for the manufacture/assembly of the WTG was to be in Tamil Nadu or Puducherry, extensive discussions were held between the parties in Chennai. The respondent's representatives visited Chennai on several occasions and held extensive discussions and made elaborate inspections of several prospective factory sites.

19 The applicant has placed on record, the correspondence between the parties evidencing the discussions between the applicant and the representatives of the respondent at Chennai.

20 It is the case of the applicant that they received e-mail from the respondent, dated 30.6.2012 summarily and arbitrarily suspending the collaboration agreement entered into between the parties purportedly in view of alleged policy change from C-WET, though admittedly there was no change in policy by the C-WET. This fact was at a later point of time admitted in writing by the respondents themselves by way of e-mail addressed to the applicant.

21 The case of the applicant is that it has invested substantially in the project apart from expecting huge amount of returns from the same as was assured to it by the respondents. It is also case of the applicant that it had entered into collaboration agreement with the respondent on the express representation on behalf of the respondent that they had already secured orders in excess of U.S.Dollars two hundred and twenty five million, approximately INR.1200,00,00,000/- (Rupees one thousand two hundred crore only). In view of such representation and on the further representation on behalf of the respondent that many more such contracts were in the offing, that it had desired to have an Indian partner for the execution of the said contracts in hand and those in the pipeline, that the applicant agreed to sign the collaboration agreement. Accordingly, legal notice was sent to the respondent on 21.8.2012 and it was made clear that the applicant would proceed in accordance with law.

22 In response to the legal notice, the representatives of the respondent visited the applicant at Kolkatta and meetings were held to resolve the differences between the parties. In the meeting held on 10.10.2012, the differences were not resolved which was intimated to the respondent by the applicant's director by e-mail, dated 18.10.2012.

23 In the reply dated 19.11.2012, the respondent took a stand that agreement was in force and the respondent expected the applicant to provide a detailed road map for the successful execution and operationalization of the Collaboration agreement. The applicant again sent a reply reserving their right to respond in detail at a later stage since at that point of time correspondence had again commenced between the parties to reach at amicable settlement of their disputes.

24 The applicant was given sole and exclusive rights to carry on sales and manufacturing in India, as also apply for C-WET license by the respondent for Model W-2000 and all other current and future models of WTGs to be introduced by the respondent in India for an irrevocable and inflexible period of 10 years from the date of signing of the agreement on 21.2.2012 and a further period of three years thereafter on mutual agreement.

25 The case of the applicant is that the respondent is in the process of finalisation deals with third parties and parting with the rights exclusively bestowed on the applicant to such third parties.

26 It is submitted that the respondent informed the applicant that it would not be possible to enforce the award passed by the Arbitrator in India, as the respondent is a government company in China. According to the applicant, though respondent is functioning from China, the applicant can neither enforce the agreement or recover damages and its other rightful dues from the respondent even if awarded by the Arbitrator.

27 It is also case of the applicant that at the time of signing collaboration agreement, the respondent had huge orders in hand which was reason for the applicant to enter into Collaboration agreement.

28 The case of the applicant is that under the Collaboration agreement, the applicant has the exclusive right to manufacture and sale of all their models/products/components/parts within the territory of India under introduction and to be introduced subsequently, during the tenure of the agreement.

29 That by virtue of letter dated 19.4.2012, C-WET has allowed the applicant to apply for inclusion in the RLMM main list and also to get licence from C-WET. No third party can be issued C-WET licence or be considered for inclusion in RLMM with regard to marketing or selling any of the respondent's models/products/ components/parts of Wind Turbines or for sub-contract or sub assembly of components.

30 The applicant is also initiating appropriate proceedings for appointment of the Arbitrator and in the meantime, pending arbitral proceedings, the applicant has prayed for grant of interim injunction.

31 The application is opposed by the respondent by raising preliminary objection that this Court has no jurisdiction to entertain and try this present application, as the applicant has wrongly averred, that Clause 7 of the Collaboration agreement confer jurisdiction on this Court to entertain this petition.

(i) Clause 7 of the Collaboration agreement reads as under:

"7. Governing Law and Jurisdiction:

7.1 This Agreement shall be governed by and construed in accordance with the laws of India.

7.2 Any dispute with regard to this agreement shall be resolved by final and binding arbitration in India in accordance with Uncitral rules of arbitration, as in force for the time being."

A bare perusal of Clause 7 makes it clear that there is not even a whisper of a mention about this Court having the jurisdiction to entertain the present petition. It is submitted that admittedly, the respondent is a entity based in China and the applicant is an entity based in Kolkatta, West Bengal. Moreover, the location of the facility in Clause 2.1 of the Collaboration Agreement purportedly identified by the applicant, is located in pondicherry. Thus, this Court does not have the necessary territorial jurisdiction to entertain the present petition and accordingly, the present petition ought to be dismissed in limine."

(ii) That the applicant is not entitled to relief as prayed for, as it has failed to comply with any of its obligations contemplated under the Collaboration agreement entered into between the parties on 21.2.2012.

(iii) That in terms of Clause 2.1 of the Collaboration agreement, the applicant was obliged to undertake the following obligation.

"Set up a facility, for subcontract and sub assembly of components of SEWIND WTGs, as per SEWIND defined standards, Location of the facility shall be in Tamil Nadu/Pondicherry as approved by SEWIND at its own cost.

(iv) That on inspection, it was noticed that the facility identified by the applicant was inadequate for the operations and furthermore, there is no evidence of the applicant having acquired the said facility. The facility does not belonged to the applicant.

(v) It is also the stand of the respondent that for operating a facility where there will be inter-alia sub assembly of Wind Turbines a number of statutory clearances and certificates are required to be obtained by the applicant such as a factory license, sales tax/VAT registration, pollution clearance etc. but the respondent has not obtained any of these mandatory approvals to operate a facility whereas on the other hand, is seeking specific performance of the Collaboration Agreement on the basis of an empty plot of land identified by him for the purpose of setting up a facility.

(vi) That no material has been placed on record to show its seriousness of the applicant to comply with its obligations under the Collaboration agreement.

(vii) That the relief claimed is in the nature of mandatory interim injunction and furthermore, the claim to manufacture, assemble, import, market, sell or in any manner dealing with wind turbine generators (WTG) amounts to creation of a new right as no such right was contemplated under the Collaboration agreement.

(viii) That mandatory interim injunction creating and conferring a new right entitlement upon the applicant cannot be granted under Sec.9 of the Arbitration and Conciliation Act.

(a) It is submitted that in view of above mentioned objections, the applicant has not made out a case for grant of mandatory interim injunction, in view of law laid down by the Hon'ble Supreme Court in Dorab Cawasji Warden v. Coomi Sorab Warden (1990)2 SCC 117 laying down as under:

"The relief of interlocutory mandatory injunctions are thus granted generally to preserve or restore the status quo of the last non-contested status which preceded the pending controversy until the final hearing when full relief may be granted or to compel the undoing of those acts that have been illegally done or the restoration of that which was wrongfully taken from the party complaining. But since the granting of such an injunction to a party who fails or would fail to establish his right at the trial may cause great injustice or irreparable harm to the party against whom it was granted or alternatively not granting of it to a party who succeeds or would succeed may equally cause great injustice or irreparable harm, courts have evolved certain guidelines. Generally stated these guidelines are:

(1) The plaintiff has a strong case for trial. That is, it shall be a higher standard that a prima facie case that is normally required for a prohibitory injunctions.

(2) It is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money.

(3) The balance of convenience is in favour of the one seeking such relief."

(b) That the applicant has failed to make out a prima facie case for grant of mandatory injunction and furthermore, rights claimed are outside the purview of the Collaboration agreement.

(c) That applicant has not pleaded that it will suffer irreparable loss and injury if injunction as prayed for, is not granted and the alleged loss is capable of being compensated for in terms of money, therefore, no injunction can be granted.

(d) That the relief claimed by the applicant virtually amounts to grant of final relief that shall be available to the applicant in arbitration, as the interim injunction prayed for by the applicant the application mandates the respondent to specifically perform the Collaboration Agreement.

(e) The dispute raised by the applicant as to "Whether the respondent has breached the Collaboration agreement and or should be directed to perform the said agreement is to be decided by the arbitral tribunal."

(f) Therefore, grant of interim injunction will amount to deciding the dispute finally which is not permissible in view of the law laid down by the Hon'ble Supreme Court in Mehul Mahendra Thakkar @ Karia v. Meena Mehul Thakkar @ Karia (2009)14 SCC 48) laying that:

"It is settled legal position, that by way of interim relief, final relief should not be granted till the matter is decided one way or the other"

(g) The application is said to be outside the scope of Section 9 of the Arbitration and Conciliation Act, 1996, as orders for interim protection, if any can only be passed once the applicant perform its obligations under the Collaboration Act viz., inter alia the setting up of a facility as contemplated in Clause 2.1 of the said agreement.

(xvi) That Scope of work does not confers exclusive entitlement on the applicant to assemble, manufacture, import, market, sell the respondent's WTGs.

(xvii) Clause 6.6 of the Collaboration agreement states that SEWIND agrees to work exclusively with Indian Partner for the manufacture and sales of all its WTG models in India. This clause according to the respondent was to be read with scope of work provided in Clause 2.

(xviii) Reliance in support is placed on the judgment of the Hon'ble Supreme Court in Bank of India v. K.Mohandas (2009)5 SCC 313) wherein the Hon'ble Supreme Court was pleased to lay down as under:

"It is also a well-recognized principle of construction of a contract that it must be read as a whole in order to ascertain the true meaning of its several clauses and the words of each clause should be interpreted so as to bring them into harmony with the other provisions if that interpretation does no violence to the meaning of which they are naturally susceptible."

(xiv) That relief claimed amounts to specific performance of the Collaboration agreement which is barred under Section 14(1) of the Specific Relief Act, as the applicant can be compensated in terms of the money.

(xx) That the applicant cannot seek specific performance as it has not pleaded, that applicant is ready and willing to perform its part of the Collaboration agreement.

(xxi) The application is also barred under Sec.16(c) of the Specific Relief Act, 1963.

(xxii) The allegations by the applicant in affidavit are rebutted by the respondent by pleading as under:

a. The respondent had entered into an Exclusive Agent Agreement with Shanghai Power Projects Ltd. On 2.11.2011, appointing as its exclusive authorized agent to sell SEWIND's products in India and that the respondent had entered into the said agreement prior to entering into the Collaboration agreement with the applicant. As the respondent required assistance in obtaining C-WET certification for selling its WTGs in India, SPPL introduced the applicant to the respondent with the assurance that the applicant has the full ability to obtain the C-WET certification on behalf of the respondent.

In this backdrop, the respondent entered into the Collaboration agreement with the applicant for the limited scope of work extracted in the counter, which inter alia included obtaining the relevant approvals for the facility to manufacture/assemble the respondent's WTGs in India. The respondent was obliged to set up a facility for the assembly of the respondent's WTGs and also obtain C-WET certification for the said facility.

b. Subsequently, the parties engaged in discussions regarding the location of the facility and the respondent was falsely given to understand that the C-WET requirements shall be satisfied by the factory claimed to be situated at Pondicherry.

The applicant for the purpose of obtaining the C-WET approval for the respondent had requested the various technical information from the respondent relating to the WTGs which included the weight specifications, nacelle drawings, drawings of the assembly factory, quality management documents etc. The respondent relying on the experience and ability of the applicant, provided all the information required by the applicant for the purpose of applying and obtaining the C-WET Certification. The respondent placed on record, the copy of the correspondences exchanged between the parties.

c. That it was relying on the expertise of the applicant for obtaining the C-WET certification and hence, provided all the relevant data as requested for by the applicant. It is pertinent to note that prior to seeking the C-WET approval the applicant had not even on a single occasion, informed the respondent about requiring an ISO Certificate and/or that nacelles (of the WTG) are required to be made available at the proposed facility in Pondicherry. It is only subsequent to the submission of the application that the respondent was informed by SPPL in its email dated 16.4.2012 addressed to the respondent that international Organization for Standardization (ISO) certificate shall be issued only after inspection of the nacelles. This was also brought to light in the letter dated 19.4.2012 issued by the Ministry of New and Renewable Energy, Government of India which has been placed on record by the applicant.

d. The respondent further submits that the C-WET rejected the application for C-WET certification on the ground that the 'validity of the ISO certificate was not provided and that the ISO certification for the manufacturing facilitywas still under process. None of the reasons stated above can be attributed to the respondent as the applicant had informed the respondent about the requirement of nacelles to be made available at the proposed facility for ISO Certification only after submitting the C-WET application. Furthermore, it is only after the rejection of the C-WET application on 19.4.2012 that the applicant started pressing for the need of nacelles for obtaining the ISO certification. This requirement was neither stipulated in the Collaboration agreement nor discussed with the respondent prior to 16.4.2012.

e. Subsequent to the rejection of the C-WET application, the applicant enquired about the requirement of sample nacelles for the C-WET Certification with a view to assist in obtaining the C-WET approval. In fact, realizing that the Collaboration agreement did not provide for making available nacelles at the proposed facility free of cost, the applicant vide its email dated 21.6.2012 even agreed to purchase the requisite nacelles from the respondent. However, the applicant introduced various unjustified demands and conditions making the entire C-WET Certification process subject to conditions not even contemplated by the parties in the Collaboration agreement. The applicant sought to purchase the nacelles subject to the following conditions: (a) that VPL shall be renamed as VPL-SEWIND and (b) SEWIND shall nominate a director on the board on the newly proposed VPL-SEWIND. That Clause 2.1 of the Collaboration agreement made it clear that the applicant was to obtain C-WET certification at its own cost without any additional conditions. Moreover, the use of SEWIND's name in VPL was not only outside the ambit of the Collaboration agreement, but also a grave encroachment on the goodwill and reputation of the respondent. Hence, in the light of the above mentioned circumstances, the respondent was constrained to suspend the Collaboration agreement vide its email dated 30.6.2012 as terms and conditions, additional and contrary to the Collaboration agreement, were being imposed upon it. After the respondent addressed the email dated 30.6.2012, parties exchanged correspondences. In fact, with a view to resolve the difference that arisen between the parties, the respondent even met with VPL at Kolkata, India on 10.10.2012. The respondent demonstrated its bonafides and efforts to seek resolution of the dispute by travelling to India to meet with the applicant and at the culmination of the meeting in fact, thought that the parties had agreed to jointly work towards resolution of mutual concerns regarding implementation of the existing terms recorded in the Collaboration agreement. However, the applicant once again did a volte face and addressed an email dated 19.10.2012. The respondent duly responded to each of the issues raised by the applicant vide its letter dated 19.11.2012 after which the respondent did not even receive any communication from the applicant.

f. That it has been put to substantial financial and reputational loss as it is not able to honour its commitments with the clients in India owing to the applicant's failure in obtaining the required C-WET and ISO certificate for its facility and reserves its rights to raise claims in this regard at appropriate stage.

(xxiii) On merit, it is denied that the applicant was appointed as sole exclusive Indian partner of the respondent to manufacture, assemble the components of the respondent's WTGs. It is also denied that the applicant had the sole right to manufacture and sell the WTGs. The applicant's role under the Collaboration agreement was restricted to setting up of the facility for the assembly/ manufacture of the WTGs procurement of C-WET, ISO and other certifications for the assembling / manufacturing facility and sub-contracting/sub assembly of the WTGs.

(xxiv) It is the case of the respondent that Clause 6.6 of the Collaboration agreement is ancillary and subject to the overreaching obligations provided for in Clause 2 of the Collaboration agreement. However, para 5 & 6 of the affidavit in support of the application are not disputed.

(xxv) The stand of the respondent is that certificate was issued by the respondent to enable the applicant to get C-WET certification, but was not mean to give exclusive right to the applicant as framed.

(xxvi) It is denied that C-WET certificate was refused on the ground that the respondent was unable to furnish obligatory certificational information. The application for ISO was rejected on the ground that the ISO certification was under process.

(xxvii) The respondent has also not denied that it has entered into Collaboration agreement. The stand taken is that applicant had a very limited role to play in terms of the Collaboration agreement. Furthermore, there is no restriction under Collaboration agreement as pointed out by the applicant.

(xxviii) That averments in the affidavit have been denied primarily on the ground that the applicant is misinterpreting agreement between the parties.

32 A rejoinder to the counter has been filed by the applicant. In the rejoinder, the stand taken is that jurisdiction of this Court has been invoked based on the cause of action read with clause 7 of the Collaboration agreement.

(i) The stand taken by the applicant is that this Court has territorial jurisdiction to entertain and try this application. Cause of action pleaded on the ground that discussions were held at Chennai and furthermore, steps for securing of the C-WET Certification as also many meetings with C-WET took place at Chennai.

(ii) It is submitted that the applicant has complied with all the obligations under Clause 2 of the agreement and therefore, is entitled to injunction as prayed for. That factory premises photographed which stood approved and no objection was taken to it at any stage.

(iii) It is submitted that there is no necessity for the applicant to prove setting up of facilities in view of the admission by the respondent. The stand is also that Collaboration agreement prohibits the respondent from entering into agreement with third parties in India. The averments made in the counter have been denied.

32 The learned counsel for the applicant vehemently contended that admittedly Collaboration agreement, relating to the contract of manufacturing and assembly of components of Wind Turbine generator in C-WET and RLMM guidelines in India was entered into between the parties. The obligations of the applicant was defined under Rule 2.1 of the Collaboration agreement and that of the respondent was defined under Rule 2.2. The Collaboration agreement clearly stipulated that the applicant undertook not to involve itself that any other WTGs manufacturer other than the respondent and the respondent agreed to work exclusively with the applicant for the manufacture and sale of all its Wind Turbine materials in India, under introduction and to be introduced subsequently during tenure of agreement. The agreement further provided that the agreement was to remain in force for initial period of 10 years. Following such initial period, it was to be renewed based on mutual agreement for another term of three years. It was vehemently contended that neither party was unable to terminate the contract during this period.

33 The learned counsel for the applicant therefore, vehemently contended that as the agreement contains negative covenants prohibiting the parties to deal with any third parties, and that the parties were to deal exclusively with each other. The agreement become enforceable in law. The applicant therefore is entitled to injunction restraining the respondent from entering into agreement with any third party.

34 It was also vehemently contended by the learned counsel for the applicant, that averments made in para 5 of the application pointing out that the discussion between the parties were held at Chennai was not disputed in the counter. Therefore, part of cause of action arose to the applicant, within the territorial jurisdiction of this Court. Therefore, it cannot be said that this Court does not have the jurisdiction to entertain and try this application.

35 It is also vehemently contended that in view of the nature of the contract between the parties, the compensation was not adequate relief, as in view of the negative covenant in the agreement, the applicant was entitled to specifically enforced this agreement and the objections raised by the respondent are not sustainable in law.

36 The learned Senior counsel appearing on behalf of the respondent on the other hand, vehemently contended. that the agreement has to be read in totality and in absence of proof that the applicant has fulfilled its obligations in terms of Clause 2.1, it cannot seek temporary injunction in the mandatory form as the applicant has failed to prove that it has set up facility. The applicant having not performed its part of the obligations, therefore, cannot seek injunction in mandatory form.

37 The learned Senior counsel also vehemently contended, that there is no pleading in the affidavit showing cause of action this Court to entertain and try the present application, as mere discussions at Chennai could not give jurisdiction to this Court, as admittedly, the registered office of the applicant is at Kolkatta whereas facility was to set up at Puducherry. This Court therefore does not have jurisdiction, as it cannot be considered to be Principal Court having jurisdiction to entertain the application under section 9 of the Arbitration and Conciliation Act, as there is District Court at Puducherry.

38 In support of the contention that this court has no jurisdiction, reliance was placed by the learned Senior counsel for the respondent on the judgment of this Court in Garlapati Ramanaiah Naidu and G.Lalithamma vs. L & T Finance Ltd. (2012(5) CTC 172) wherein it was laid down as under:

"50. As per the ratio laid down in the said decision, the performance of a contract is a part of cause of action and a Suit in respect of a breach can always be filed at the place where the contract should have been performed or it is completed and the jurisdiction of the Court in the matter of contract will depend on the suits of the contract and the cause of action arising through connecting factors. It has been further held that if there is a stipulation that the contract shall be deemed to have been made at a particular place, the same would provide the connecting factor for jurisdiction of the Courts of that place in the matter of any dispute and/or arising out of that contract. As regards ouster of jurisdiction, it has been held in the said decision that when the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Court should avoid exercising jurisdiction and when certain jurisdiction is specified in a contract, an intention to exclude all other from its operation may in such case be inferred."

39 The learned counsel for the respondent further contended that under Sec.9 of the Arbitration and Conciliation Act, it is not permissible to seek relief of enforcement of the terms of the contract or seek injunction restraining the other party for violating terms of the contract, as Sec.9 can be used only to preserve the property which is subject matter of the dispute. Therefore the application as framed is not competent in law.

40 In support of this contention, reliance was placed on the judgment of the Hon'ble High Court of Delhi in Trehan Promoters and Builders Pvt. Ltd. vs. Welldone Technology Parks Development Pvt. Ltd. (OMP No.507/2009 decided on 4.9.2009) laying down as under:

"6. <act id=_LGxPokB_szha0nWKtKy section=9>Section 9 </act>is applicable only where a party has invoked the arbitration clause or has intention to invoke the arbitration clause, Section is not in the nature of provisions of Specific Relief Act where a part can come to the Court and pray for a relief of performance of the contract and ask the Court to compel the other party to abide by the terms and conditions of the contract and seek an injunction from the Court that the party should be restrained from violating the terms and conditions of the contract. In fact, <act id=_LGxPokB_szha0nWKtKy section=9>Section 9 </act>of the Act envisages existence of an arbitration clause whereunder the disputes resolution mechanism is provided and the parties had chosen the arbitration as a dispute resolution mechanism instead of choosing the Court to resolve their disputes. Resort to the Court under <act id=_LGxPokB_szha0nWKtKy section=9>Section 9 </act>of the Act is for limited purpose of preserving the property which is the subject matter of dispute so that by the time the arbitrator decides the dispute, the property itself is either sold away or disposed of by the opposite side, or being of perishable nature is likely to perish or where there is need to appoint a receiver, the Court passes an order for appointing a receiver. The extent and scope of relief under <act id=_LGxPokB_szha0nWKtKy section=9>Section 9 </act>of the Act cannot extend so as the Court directs a party specifically perform the contract so that the party approaching the Court has not to go to the arbitrator for breach of contract. <act id=_LGxPokB_szha0nWKtKy section=9>Section 9 </act>does not envisage a situation where the order of the Court under <act id=_LGxPokB_szha0nWKtKy section=9>Section 9 </act>itself settles the disputes between the parties. Neither by the instrumentalities of <act id=_LGxPokB_szha0nWKtKy section=9>Section 9,</act> the Court can put the party back into pre-dispute situation and ask the party to comply with the contract. Even under Order 39 Rules 1 & 2 CPC, which is referred to as akin to <act id=_LGxPokB_szha0nWKtKy section=9>Section 9 </act>of the Act, an interim relief cannot be granted which is same as the relief sought in the suit, and which amounts to disposal of the suit itself. [P.Subbarao and others v. Andhra Pradesh Association FAO (OS) 25 2007 Delhi DB]. If the Court could direct specific performance of the contract under <act id=_LGxPokB_szha0nWKtKy section=9>Section 9 </act>of the Arbitration and Conciliation Act, and could place the parties in the position prior to rising of dispute, no dispute would ever go to the arbitrator and by an interim relief itself, the Could would be finally disposing of all the disputes between the contracting parties by just directing specific performance of the contract, irrespective of the breach on the part of one or the other"

41 The learned Senior counsel also vehemently contended, that the principles based on which an order under Section 9 is passed are not different from principles laid down under Order 39 Rule 1 of C.P.C. and in absence of prima facie case, balance of convenience and irreparable loss and injury, no injunction can be granted.

42 In support of this contention, reliance was placed on the Hon'ble Division Bench judgment of this court in Cholamandalam DBS Finance Ltd. Vs Sudheesh Kumar (2010(1) CTC 481) laying down as under:

"16. The principles based on which an order under Section 9 is passed are not very different from the principles based on which interim injunction under Order 39, Rule 1, of CPC is granted. The person applying should show prima facie case and should also establish the irreparable injury and also the balance of convenience and in case, where a vehicle is to be emergently seized, there should be averments to show why it is jut and convenient to seize the vehicle. It is also well settled that the mere recitals of the words in the Section is not sufficient. The applicant should make out a case for the Court to grant the interim measure of protection. Without these, the applicant may not be entitled to an ex parte order and the Court shall exercise its discretion while granting such an order. The party invoking Section 9 must also be able to satisfy the Court that arbitral proceedings are actually contemplated or about to be initiated."

43 The learned Senior counsel for the respondent vehemently contended that admittedly, the registered office of the applicant is at Kolkatta and the facilities were situated at Puducherry. Therefore, application under section 9 of the Arbitration and Conciliation Act could be filed either at Kolkatta or Principal court at Pudhucherry. This Court in any case does not have the jurisdiction to entertain and try this application as mere discussions are not sufficient to constitute a cause of action. In support of this contention, reliance was placed on the judgment of the Hon'ble Supreme Court in M/s.Patel Roadways Ltd. Bombay vs. M/s.Prasad Trading Company (1991)4 SCC 270) wherein the Hon'ble Supreme Court was pleased to lay down as under:

"12. We would also like to add that the interpretation sought to be placed by the appellant on the provision in question renders the explanation totally redundant. If the intention of the legislature was, as is said on their behalf, that a suit against a corporation could be instituted either at the place of its sole or principal office (whether or not the corporation carries on business at that place) or at any other place where the cause of action arises, the provisions of clauses (a), (b) and (c) together with the first part of the explanation would have completely achieved the purpose. Indeed the effect would have been wider. The suit could have been instituted at the place of the principal office because of the situation of such office (whether or not any actual business was carried on there). Alternatively, a suit could have been instituted at the place where the cause of action arose under clause (c) (irrespective of whether the corpora- tion had a subordinate office in such place or not). This was, Therefore, not the purpose of the explanation. The explanation is really an explanation to clause (a). It is in the nature of a clarification on the scope of clause (a) viz. as to where the corporation can be said to carry on business. This, it is clarified, will be the place where the principal office is situated (whether or not any business actually is carried on there) or the place where a business is carried on giving rise to a cause of action (even though the principal office of the corporation is not located there) so long as there is a subordinate office of the corporation situated at such place. The linking together of the place where the cause of action arises with the place where a subordinate office is located clearly shows that the intention of the legislature was that, in the case of a corporation, for the purposes of clause (a), the location of the subordinate office, within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the principal place of business. If the intention was that the location of the sole or principal office as well as the location of the subordinate office (within the limits of which a cause of action arises) are to be deemed to be places where the corporation is deemed to be carrying on business, the disjunctive "or" will not be there. Instead, the second part of the explanation would have read "and in respect of any cause of action arising at any place where it has a subordinate office, also at such place".

13. As far as we can see the interpretation which we have placed on this section does not create any practical or undue difficulties or disadvantage either to the plaintiff or a defendant corporation. It is true that, normally, under clauses (a) to (c), the plaintiff has a choice of forum and cannot be compelled to go to the place of residence or business of the corporation and can file a suit at a place where the cause of action arises. If a corporation desires to be protected from being dragged into litigation at some place merely because a casue of action arises there it can save itself from such a situation by an exclusion clause as has been done in the present case. The clear intendment of the Explanation, however, is that, where the corporation has a subordinate office in the place where the cause of action arises, it cannot be heard to say that it cannot be sued there because it does not carry on business at that place. It would be a great hardship if, in spite of the corporation having a subordinate office at the place where the cause of action arises (with which in all probability the plaintiff has had dealings), such plaintiff is to be compelled to travel to the place where the corporation has its principal place. That place should be convenient to the plaintiff; and since the corporation has an office at such place, it will also be under no disadvantage. Thus the Explanation provides an alternative locus for the corporation's place of business, not an additional one."

44 From the pleadings and the arguments raised by the respective counsel, it is clear that the parties entered into a Collaboration agreement, dated 21.2.2012. The agreement was signed by the applicant at Kolkatta and sent to the respondent, who after signing sent it back to the applicant at Kolkatta, as it is stipulated in the agreement that any notice, communication, request or correspondence required or permitted under the terms of agreement shall be in writing and ought to be delivered at the address notified which is that of registered office of the applicant.

45 It is also not in dispute that the facilities though disputed by the respondent is not within the jurisdiction of this court, but is at Pudhucherry. It is also admitted that the agreement has not been so far terminated and has been merely suspended.

46 The question whether the respondent could suspend the agreement unilaterally will be a question to be determined by the Arbitrator, as this Court under Sec.9 of the Act, cannot go into the merit of the controversy between the parties and is only to see whether the applicant has made out a prima facie case, balance of convenience and irreparable loss and injury.

47 The contention of the learned Senior counsel for the respondent that the applicant is not entitled to injunction as prayed, in view of the bar under section 14(1) and 16(c) of the Specific Relief Act, cannot be accepted in view of Sec.42 of the Specific Relief Act which reads as under:

"42 Injunction to perform negative agreement:-

Notwithstanding anything contained in clause (e) of section 41, where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstance 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 agreement:

Provided that the plaintiff has not failed to perform the contract so far as it is binding on him."

48 Reading of Collaboration agreement shows, that the parties had agreed that the applicant shall not involve itself with any other WTD manufacturer other than the respondent. Similarly, the respondent agreed to work exclusively with the applicant for manufacture and sale. It is therefore, open to the applicant to enforce negative covenant in the agreement.

49 The agreement also does not show that the parties had option to terminate the contract. The documents placed on record by the respondent also do not show, if any notice was issued calling upon the applicant to perform any obligations or to upgrade the facilities as stated in the counter, rather correspondence placed on record only shows that the parties were taking steps for implementation of the agreement. No notice is shown to have been issued to invoke the right of cancellation of the agreement.

50 Similarly, the stand of the learned Senior counsel that interlocutory mandatory injunction cannot be granted is also not correct, as the applicant is seeking to enforce negative covenants restraining the respondent from violating the terms of Collaboration agreement. The relief is prohibitory in nature, in view of the fact that the agreement is for a period of 10 years, with no option of termination.

51 The judgment of the Hon'ble Supreme Court in Dorab Cawasji Warden v. Coomi Sorab Warden (supra) therefore cannot have any application to the facts of this case.

51 The learned Senior counsel was right that question whether the respondent has breached the Collaboration agreement or should be directed to perform the said agreement can be decided by the Arbitral Tribunal. The contention, that the applicant failed to perform its part of the contract can also be decided by the Arbitrator.

52 The object of moving this application is to preserve the subject matter of arbitration agreement, i.e. exclusive right granted under the agreement pending arbitral proceedings. It cannot be said that application is not maintainable or that the applicant has failed to prove prima facie case.

53 It also cannot said that the applicant is not entitled to interim injunction in view of bar under section 41 of the Specific Relief Act as contended by the learned counsel for the respondent, as it is always open to enforce negative covenants.

54 The contention of the learned Senior counsel, that Clause 6.6 has to be read with Clause 2 cannot be disputed, but the reading of the contract as a whole shows that the parties had agreed that they will exclusively work with each other for initial period of 10 years. Therefore, in absence of cancellation of agreement by following due process of law, it is not open to the respondent to enter into an agreement with any third party regarding subject matter of the Collaboration agreement.

55 At the same time, the application deserves to be rejected for want of jurisdiction of this Court to entertain and try this application.

56 The reading of the affidavit filed in support of the application itself shows that the applicant invoked the jurisdiction of this Court only on the ground that certain discussions were held between the parties at Kolkatta and Chennai. As also for the reason that C-WET certification was to be secured from Chennai. Mere discussion cannot be said to be a part of a cause of action, to give jurisdiction, as the act of suspension of agreement which gives cause of action, was conveyed to applicant at Kolkatta. The factory premises are also situated at Puducherry, therefore, no cause of action arose to the applicant within the territorial jurisdiction of this Court.

57 The Hon'ble Supreme Court in Sadanandan Bhadran v. Madhavan Sunil Kumar (1998 (6) SCC 514) has laid down as under:

"9. In a generic and wide sense (as in Section 20 of the Civil Procedure Code, 1908) "cause of action" means every fact, which it is necessary to establish to support a right to obtain a judgment."

58 Again the Hon'ble Supreme Court in South East Asia Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd. and others. (1996 (3) SCC 443) was pleased to lay down as under:

"10. It is settled law that "cause of action" consists of bundle of facts, which give cause to enforce the legal inquiry for redress in a court of law. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise."

59 In the case of Rajasthan High Court Advocates' Association v. Union of India and Ors. (supra), the Hon'ble Supreme Court held as under:

"11 The expression "cause of action" has acquired a judicially settled meaning. In the restricted sense "cause of action" means the circumstances forming the infraction of the right or the immediate occasion for the reaction. In the wider sense, it means the necessary conditions for the maintenance of the suit, including not only the infraction of the right, but also the infraction coupled with the right itself. Compendiously, as noted above the expression means every fact, which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. Every fact, which is necessary to be proved, as distinguished from every piece of evidence, which is necessary to prove each fact, comprises in "cause of action".

60 Even according to Halsbury Laws of England (Fourth Edition) it has been stated as follows:

"Cause of action has been defined as meaning simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person. The phrase has been held from earliest time to include every fact which is material to be proved to entitle the plaintiff to succeed, and every fact which a defendant would have a right to traverse. 'Cause of action' has also been taken to mean that particular act on the part of the defendant which gives the plaintiff his cause of complaint, or the subject matter of grievance founding the action, not merely the technical cause of action".

VINOD K.SHARMA, J.

vaan 61 When the pleadings of applicant in the affidavit as also in the rejoinder to counter are taken as their face value, it can be said that only discussions were held at Chennai which cannot be said to be a fact which is required to be proved to claim relief, specially when clauses in the agreement clearly stipulated that all correspondence between the parties are to be at the address given in the agreement.

62 Therefore, part of cause of action can be said to have arisen at Puducherry or Kolkatta, therefore, this Court does not have the jurisdiction to entertain and try the application. As the respondent also does not reside within the jurisdiction of this Court nor any cause of action has arisen within the territorial jurisdiction of this Court.

Consequently, the application is ordered to be returned to the applicant for presentation in the competent Court having jurisdiction.

No costs.