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Are tortious interference suits antithetical to free market competition?

Existence of a contract is an essential concomitant for this tort to have occasioned. The act of wrongfully inducing a person not to enter into a contract does not amount to tortious interference.

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What is the Tort of Interference? Strictly speaking, the foundational decision which recognised the economic tort of interference in English contract law was the case of  Lumley v. Gye rendered by the Queen’s Bench in 1853. However, it was not until the year 1978 when, in the case of Greig v. Insole, the Chancery Division crystallized the fundamental conditions to be fulfilled by a plaintiff in a suit for Tortious Interference.

 The broad parameters encapsulating the tort of interference set forth in Grieg’s case were cited with approval in a decision rendered by the Calcutta High Court in Lindsay International Pvt. Ltd v. Laxmi Niwas Mittal. This decision was perhaps what can be stated to be introductory case on the subject in Indian jurisprudence.

Developed, as the law become thereafter, the threshold conditions for the commission of this tort came to be casted into the following formulation:

Firstly, there needed to be a contract which is clearly identifiable. Existence of a contract is an essential concomitant for this tort to have occasioned. The act of wrongfully inducing a person not to enter into a contract does not amount to tortious interference (see: Midland Cold Storage Ltd. v. Steer & Ors)

Secondly, the defendant must have had knowledge of the existence of the contract. It was, however not necessary for the defendant to know the exact ingredients of the contract.

Thirdly, the breach of such contract must be have been caused by the defendant by unlawful means.

Fourthly, damages ought to have occasioned to the plaintiff due to such breach.

Winfield and Jolowicz on Tort, best condenses the commission of this tort, with the aid of an illustration, as follows:

“A commits a tort if, without lawful justification, he intentionally interferes with a contract between B and C, (a) by persuading B to break his contract with C, or (b) by some other act, perhaps only if tortious in itself, which prevents B from performing his contract.”

The recent decision by the Hon’ble High Court of Delhi in INOX Leisure Limited v. PVR Limited is the latest addition in the treatise to Tortious Interference Suits, albeit on a view au contraire.

 Factually, the premise of the suit filed by Inox against PVR Cinemas, was, inter alia, that while Inox, with an intent to expand its business footprint, had entered into a binding term sheet with a developer with regard to a property in Amritsar, PVR Cinemas continued to persuade the developer to enter into an agreement for that property with itself, by inducing it to breach the term sheet entered into by Inox and the developer. It was further averred that the developer entered into an agreement qua the same property with PVR and informed Inox that the term sheet stood automatically terminated on account of its failure to execute the main Transaction Document within the stipulated time. This, according to Inox, happened at the behest of PVR and illegal inducement of the developer by PVR was attributed. Therefore in a nutshell, Inox’s case was that PVR interfered in the contractual relationship of Inox with a third party, inspite of being aware of such contractual relationship.

The Court postulated three possible scenarios which could have occasioned, and offered the correct remedy for each of them, as follows:

If Inox had binding lease with the developer/owner of the properties and had not been put into possession of the property, his remedy was to seek to be put into possession of the property.

If Inox had no binding agreement or a lease but only an agreement to lease, its remedy was to sue for specific performance thereof; and finally.

 If Inox had a promise from the developer/owner of the said properties to grant a license to the plaintiff of the said properties and the developer/owner were in violation thereof, its remedy was to claim damages from them.

However, the High Court held that in none of the three situations, was a Suit for Tortious Interference a proper remedy against a third party (in that case, PVR). The court held that “…grant of injunction claimed by the plaintiff on the premise of the actions of the defendant comprising a tortious act of interference with contractual relations of the plaintiff, would be in violation of the fundamental right of the defendant, its promoters and directors to carry on trade and business…”.

The aid to the above enunciation was premised on a prior decision of the Hon’ble Delhi High Court in Modicare Limited v. Gautam Bali wherein it was held as follows:

“37.…where should the Court draw the line, between what constitutes enticement to commit breach of contract and unlawful interference in business on the one hand and competition on the other hand. Any new entrant in the market, to be able to create a niche for itself, in spite of the existing players, has to compete with the existing players, by approaching the same customers and the same cache of employees who over the years have acquired expertise in that particular field. ….In my view, it is practically impossible to draw a line between such persons, on their own approaching the new entrant, and the new entrant approaching them….”

 The Delhi High Court in Inox and in Modicare has in so many words expressed the view that the tort of interference could perhaps not exist in a modern day economy which is epitomized by free market competition. To summarize, the view expressed by the Delhi High court is that these tortious interference suits are infact antithetical to free market competition and stifle the growth of the economy.

The house is divided. The view expressed by the Calcutta High Court, recognizing this tort, clashes with the view of the Delhi High Court in distancing from its application in the contemporary economic climate.

Neither views can be discounted or applied in toto. It is felt that the view of the Calcutta High Court in recognizing the tort of interference has to abide by respecting the consideration for competition in the economy. For this balanced consideration the following questions (ofcourse, in addition to the above restated threshold paramenter) may need to be addressed by the courts to decipher whether an injunction against a third party for commission of said tort has occasioned or not:

Whether there is a concluded contract between two parties, of which the third party (i.e. the defendant) has express knowledge, however infinitesimal the knowledge may be?

What is the point of inflection where free market competition ends and tortious interference begins; and most importantly

Whether the presence of sufficient alternate remedies between two contracting parties such as suits seeking specific performance or of damages, would be an equitable bar from entertaining a suit against a third party for tortious interference?

Therefore, it seems that while the tort took more than a century to find its feet in common law, the same might only receive limited application in the Indian context on account of extreme globalization and competition. Only an authoritative pronouncement, perhaps by the Supreme Court, can now clarify and help converge the law on the issue. Short of that, the uncertainty of the law will only impede the development of the governing law on commercial transactions.

Adv. By Rushab Aggarwal is a advocate practising at the Supreme Court of India.

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Delhi HC asks trial court to consider Sharjeel Imam’s bail plea for relief

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The Delhi High Court has instructed a trial court to first consider former JNU student Sharjeel Imam’s application for relief under Section 436-A CrPC on the grounds that he has been in custody for 31 months following a 2019 sedition FIR, in accordance with the Supreme Court’s directive to keep sedition cases on hold.

According to Section 436-A, a person might well be released on bail by the court after serving a sentence of up to one-half the maximum allowed for the offence against him up until the end of the trial.

Imam claims that because he has been imprisoned for more than a year and a half since his arrest in February 2020 and has served more than half of the maximum sentence of three years under Section 153A (promoting hostility among religious groups), he is entitled to the advantage of being released.

A speech that Imam delivered at Jamia Millia Islamia in 2019 is the subject of a charge against him that was filed at the New Friends Colony (NFC) Police station.

Justice Anoop Mendiratta asked the trial court to consider the Supreme Court’s order keeping the offence of sedition in abeyance when deciding whether to grant the applicant’s request for default bail on Monday (September 26), while permitting him to withdraw his application for regular bail in a 2019 sedition case.

Appearing for Imam, his counsel Ahmad Ibrahim told the judge that the trial court, while dismissing his bail plea, had only made observations against him with respect to offences under Section 153A and 124A (sedition) and opined that no case was made out under other offences.

The counsel argued that the only offence which now warrants consideration of the trial court during the hearing of bail plea is Section 153A as offence of sedition has been kept abeyance.

Special public prosecutor Amit Prasad told the court that Imam’s bail plea pending before High Court may be withdrawn in entirety, as it may not be appropriate to consider the application under Section 436A CrPC in a piecemeal with reference to Section 153A of IPC.

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Delhi High Court restrains Axis Bank from substituting PS Toll Road Pvt Ltd (PSTR) as the concessionaire of the Pune Satara Toll Road Project

Tarun Nangia

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The Delhi High Court has restrained Axis bank from substituting PS Toll Road Pvt. Ltd (PSTR) as a concessionaire of the Pune Satara Toll Road Project. The order authored by Justice Anup Jairam Bhambani found Axis Bank in breach of its own undertaking given before the court.

The court says Axis Bank is bound by its undertaking given to the court in February 2021 & then in March 2021 that it will not go ahead with the substitution of the concessionaire in the PS Toll Road project, without the court’s nod.

Delhi HC says Axis Bank’s undertaking was unconditional, and therefore it cannot rely upon any event under the Concession Agreement or the Substitution Agreement, to appoint a new concessionaire in the project.

PS Toll Road Pvt Ltd (PSTR), the concessionaire of the Pune Satara Toll Road project, had challenged the appointment of a new concessionaire in the project by the Axis Bank despite a stay on the process by the Delhi HC in March 2021.

PS Toll Road Pvt Ltd, in its appeal before the Delhi HC, has contended that Axis Bank was in breach of its own undertaking given before the court in 2021, that it will not finalize the bids or award the contract to a third party, thereby substituting the PS Toll Road Pvt Ltd.

Sr. Adv. Neeraj Kishan Kaul with Sr. Adv. Dayan Krishnan and Adv. Mahesh Agarwal of Agarwal Law Associates (ALA) represented PS Toll Road Pvt. Ltd.

Court has issued notice to Axis Bank and the matter will be heard on 28 September.

PS Toll Road Pvt Ltd is a subsidiary of Reliance Infrastructure Ltd. and was awarded the contract for six laning of 140 KM of stretch between Pune and Satara in Maharashtra on BOT basis. The project is now complete.

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Supreme Court: Permanent injunction cannot be sought on the basis of an unregistered agreement to sell

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Supreme Court: Permanent injunction cannot be sought on the basis of an unregistered agreement to sell

The Supreme Court in the case Balram Singh vs Kelo Devi observed and stated that a relief of permanent injunction cannot be sought on the basis of such an unregistered document/agreement to sell.
The bench comprising of Justice MR Shah and Justice Krishna Murari observed that a plaintiff cannot get the relief indirectly which otherwise he/she cannot get in a suit for specific performance.
In the present case, a suit has been filled by the plaintiff praying for a decree of permanent injunction restraining the defendant from disturbing her possession in the suit property, which was claimed on the basis of the agreement to sell of which was an unregistered agreement/document to sell on ten rupees stamp paper. The suit was dismissed by the Trial Court by the original plaintiff and refused to grant permanent injunction and allowed the counter-claim of the defendant. However, the First Appellate Court reversed the Trial Court judgment and decreed the suit. The second appeal filled by the defendant was dismissed by the High Court.
In appeal, the defendant-appellant contended that an unregistered agreement to sell is not admissible in evidence and that the suit filed by the original plaintiff was only for permanent injunction and she did not seek the relief for specific performance of agreement to sell by adopting a clever drafting as she was well aware that she would not succeed in the suit filled for specific performance on the basis of an unregistered agreement to sell. On the other hand, it was contended by the respondent-plaintiff that an unregistered document can be used for collateral purpose and therefore both, the first appellate Court as well as the High Court have rightly passed a decree for permanent injunction while considering the agreement for selling of collateral purpose for grant of permanent injunction.
The Apex Court observed, while allowing the appeal:
However, having conscious of the fact that the plaintiff might not succeed in getting the relief of specific performance of such agreement to sell as the same was unregistered, a suit was filed by the plaintiff simplicitor for permanent injunction only. In a given case, it may be true that an unregistered document can be used and/or considered for collateral purpose and at the same time, the plaintiff cannot get the relief indirectly which otherwise he/she cannot get in a suit for substantive relief, namely, in the present case filled for the relief of specific performance. Thus, the plaintiff cannot get the relief even for permanent injunction on the basis of such an unregistered document/agreement to sell, more particularly when the defendant specifically filed the counter-claim for getting back the possession which was being allowed by the learned trial Court. It has been cleverly prayed by the plaintiff for a relief of permanent injunction only and did not seek for the substantive relief of specific performance of the agreement to sell as the agreement to sell was an unregistered document and therefore on such unregistered agreement/document to sell, no decree for specific performance could have been passed. By clever drafting, the plaintiff cannot get relief.
Therefore, the court restored the Trial Court judgment dismissing the suit and allowing the counter-claim.

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Supreme Court refuses to stay EC proceedings on Shinde’s claim, ‘real’ Shiv Sena tussle

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Who is real Shiv Sena? SC leaves it to EC to decide

On Tuesday, a constitution bench of the Supreme Court allowed the Election Commission of India to go ahead and decide Maharashtra Chief Minister Eknath Shinde’s claim that his faction represents the “real” Shiv Sena.
The bench comprising of Justice D.Y. Chandrachud dismissed the plea of Uddhav Thackeray camps to stay the ECI proceedings. It was argued by Mr. Thackeray that the Shinde faction was facing disqualification proceedings for defection under the 10th schedule and that the ECI should wait until the question of disqualification was decided.
The Supreme Court stated during the hearing that there was a bit of problem with Mr. Thackeray’s argument that the ECI proceedings under the Symbols Order of 1968 should be “stultified” merely because of a disqualification process against the Shinde function was pending before the Assembly Speaker.
Also, the bench comprising of Justice M.R. Shah, Krishna Murari, Hima Kohli and P.S. Narasimha stated that “we direct that there would be no stay of the proceedings before the Election Commission”.
It was observed that the Thackeray-led Maha Vikas Aghadi government had collapsed after a revolt by Mr. Shinde and the 39 other legislators against the Sena leadership.
On June 30, Mr. Shinde was sworn in as the CM along with BJP’s Devendra Fadnavis as his deputy.
The Supreme Court had referred to a five-judge bench on August 30, the plea filled by the Thackeray and Shinde-led factions raising several constitutional questions related to defection, disqualification and merger.
It was also stated that it had been asked the Election Commission Of India (ECI) not to pass any orders on the Shinde faction’s petition that it be considered the “real” Shiv Sena and be granted the party’s poll symbol.
However, the bench led by the then Chief Justice N.V. Ramana has said that the batch of petitions raise important constitutional issues which is relating to the 10th schedule of the Constitution pertaining to the disqualifications, power of the speaker and the governor, and judicial review.
It is provided by the 10th schedule of the Constitution for the prevention of defection of the elected and the nominated members for their political parties and contains stringent provisions against defection.
Earlier, it has been submitted by Thackeray faction that party MLAs loyal to Shinde can save themselves from disqualification under the 10th schedule of the constitution only by merging with another political party.
It has been contended by the Shinde group that the anti-defection law is not a weapon for a leader who has lost the confidence of his own party.

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Supreme Court Collegium Recommends To Elevate Bombay HC Chief Justice Dipankar Datta As Judge Of Supreme Court

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Supreme Court Collegium Recommends To Elevate Bombay HC Chief Justice Dipankar Datta As Judge Of Supreme Court

The Supreme Court Collegium has recommended to elevate Bombay High Court Chief Justice Dipankar Datta as a Judge of the Supreme Court.
Justice Datta is the son of a former Calcutta High Court Judge, late (J) Salil Kumar Datta and brother-in-law of Justice Amitava Roy, former Supreme Court Judge and was born in February 1965.
However, in 1989, he obtained his LL.B. degree from the University of Calcutta and was enrolled as an Advocate on November 16, 1989. Further, he worked as a Junior Standing Counsel for the State of West Bengal from May 16, 2002 to January 16, 2004 and as a Counsel for the Union of India since 1998.
From June 22, 2006., he worked as a Judge of the Calcutta High Court. On April 28, 2020., he was elevated as the Chief Justice of Bombay High Court.
He has passed several significant judgements as CJ of the Bombay High Court, including home vaccination for the bedridden and has directed a preliminary enquiry against Anil Deshmukh – Maharashtra Home Minister at the time, and an authoritative pronouncement on an illegal construction.

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Supreme Court: Notice issued on DCPCR plea challenging Juvenile Justice Act 2021 amendments making certain offences non-cognizable

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Supreme Court: Notice issued on DCPCR plea challenging Juvenile Justice Act 2021 amendments making certain offences non-cognizable

The Supreme Court in the case Delhi commission for protection of child rights v UOI observed and issued in a petition filled by the Delhi Commission for Protection of Child Rights (DCPCR) challenging the 2021 amendment made to the Juvenile Justice (Care and Protection) Act 2015 (JJ Act), which came into force on 1st September, 2022, whereby certain categories of offences against children have been made non-cognizable.
The bench comprising of Justice D.Y. Chandrachud and the Justice Hima Kohli observed, the counsel, Advocate, Mr. Preteek K Chadha appearing for DCPCR argued that the amendment sets out a less stringent standard than the Code of Criminal Procedure, 1973 or the unamended JJ Act.
However, the commission is challenging the 2021 Amendment to the extent it made the following categories of offences non-cognizable:
A. Using of children for drugs peddling
B. Using of children by terrorists
C. Exploitation of the child employee
D. Cruelty against the children
It was observed when the offences are non-cognizalbe, the police cannot register FIR and the investigation can commence only on the basis of a complaint filed before the concerned Magistrate.
Further, in 2021, the Juvenile Justice (Care and Protection of Children) Amendment Act, 2021 was passed to amend various provisions of the Juvenile Justice Act, 2015 which received the assent of the President on 07th August 2021. As the Amendement Act is yet to be notified. Thus, there are 29 Amendments carried out in the Juvenile Justice (Care and Protection of Children) Act, 2015 by the Amendment Act, 2021.
It is stated that Section 26 of the Amendment Act categorizes serious offences i.e., offences with an imprisonment for a term of three years and above, but not more than seven years as non-cognizable offence. Such offences include sale and procurement of children, employment of children for child begging, exploitation of child employee, giving intoxicating liquor or narcotic drug to a child, etc.
It is argued by the commission that such categorization violates Article 14 and 21 of the Constitution of India and also various other international obligations under the United Nations Convention on the Rights of the Child for which India is a signatory. However, such categorization is contrary to the scheme of the Juvenile Justice Act which is progressive in nature and protects children against all forms of exploitation.
Before the Court, it was argued that the categorization is also contrary to the general scheme of IPC wherein offences punishable with imprisonment for more than three years are categorized as Cognizable whereas offences are punishable with imprisonment for up to three years as non-cognizable offence. Consequently, there is no reasonable justification or rational nexus sought to be achieved by reclassifying the cognizable offences as non-cognizable offences.
The petition stated that on 08.04.2022, it is mentioned that five State Commissions for Protection of Child Rights representing the States and Union Territories of Chandigarh, Delhi, Punjab, Rajasthan and West Bengal in exercise of their powers vested under Section 15 of the Commissions for Protection of Child Rights Act, 2005 recommended to the Government of India that a Bill be tabled in the Parliament for further amending the Juvenile Justice Act, 2015 in order to restore the cognizability status of the serious offences under the Juvenile Justice Act, 2015. It is stated by DCPCR that no such response has been received from the Central Government on the recommendations.
Against this backdrop, the plea has been filled seeking a declaration that declaring the amendment to Section 86 of the Juvenile Justice (Care and Protection of Children) Act, 2015 by way of Section 26 of the Juvenile Justice (Care and Protection of Children) Act, 2021 as unconstitutional and violative of Articles 14 and 21 of the Constitution of India to the extent it makes offences under the Act which are punishable with imprisonment for a term of three years and above, but not more than seven years as non-cognizable.

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