P L D 1966 Dacca 69 (PLP)

If the notice of termination is less than six months which perhaps it is, then there is a breach of the terms of the contract as embodied in clause

2. The appellant may seek for damages for pecuniary loss sustained by reason of the irregular and premature revocation. It is a revocation right or wrong and once there is revocation, one could hardly say that the contract continues. At any rate, the Court will not hold the Railway Administration to the contract so as to force them to continue to receive the services of an unsatisfactory caterer. The extension given by six months may in a way be treated as a confirmation of the repudiation, although it has been stated that the extension is on the existing terms and conditions. It could not be argued that an extension by six months would necessitate a notice of six months for its termination. It would be normal to accept that what existing terms and conditions here implied were that during the extended period also, the other clauses of the contract would continue to apply. Mr. Hassanian having abandoned his prayer for declaration under section 42 of the Specific Relief Act by reason of his failure to establish that the contract conferred any legal character, I am left only with the question as to how far an injunction order would be justified in this case. Numerous decisions have been cited on both sides. Of these decisions, the decision in the case of Dominion of India v. R. B. Sohan Lal (A I R 1950 East Pb. 40), a decision by S. R. Das, C. J. and Soni, J., makes an exhaustive discussion of all the relevant case laws on the subject as cited at the Bar, including that of the case of Hurst v. Picture Theatres Limited ((1915) I K B 1) showing the modern position under the English law. I propose to deal with this decision in detail, the facts being very similar to the present' one and the principles laid therein being based upon a consideration of all the relevant authorities on the subject. This decision along with one other, namely, Muhammad Ziaul Haque v. Standard Vacuum Oil Company (55CWN232), which referred to and relied on the East Punjab decision, have been relied upon by both sides. I propose to discuss the East Punjab decision in the light o f the contentions of both‑ sides, on the side of the appellant that the licence is an irrevocable one and thus an injunction could be had and on the side of the opposite‑party defendant‑respondents that the licence and the contract is revocable and as such, it is not a case calling for or fit for injunction for the purpose of preventing the revocation. In this East Punjab decision it was in substance held:‑

"Under the English law, a licence may be of two kinds, namely, a bare licence which is purely a matter of personal privilege and a licence coupled with a grant or interest. A bare licence without more is always revocable at the will and the pleasure of the licensor and is not assignable although section 56, Easements Act permits the assignment of a licence to attend a public place of entertainment in the absence of any contrary intention. The power of revoking a bare licence is not affected by the fact that the licence had been given for valuable consideration. Nor does an "exclusive licence" differ in its incidents from an ordinary licence. On the other hand, if a licence is coupled with a grant or interest then the grantor cannot in general revoke it so as to defeat the grant to which it is incident. ‑ Since the Judicature Act, even if the grant be defective in law, e.g. for want of a deed under seal, the licence will still be regarded as irrevocable and relief will be granted by all Courts in England on equitable principles. Further a bare licence becomes irrevocable when the licensee acting upon the licence, executes a work of a permanent character 'and incurs expenses in doing so. The Indian Easements Act incorporated these principles in a somewhat restricted form. In order to be irrevocable under section 60 of that Act, the licence has to be coupled with a transfer of property, whereas under the English eases t is enough if it is coupled with a grant or interest in the nature of profit. The two tests of irrevocability established by the English cases or by the Indian Easements Act will, however, give way to the special agreement, if any, of the parties. Thus although a licence is prima facie irrevocable either because it is coupled with a grant or interest or because the licensee has erected works of a permanent nature, there is nothing to prevent the parties from agreeing expressly or by necessary implication that the licence shall be revocable. As regards the remedy, even where the licence is revocable the licensee is entitled to a reasonable notice before the licence is revoked. If, however, the licence is revoked without reason able notice, the remedy of the licensee is by way of damages and not by way of an injunction. Even if the licence is obtained for consideration, yet if it is otherwise revocable and is revoked the remedy of the licence is damages. If, however, the licence is irrevocable and its enjoyment is obstructed by the licensor the remedy of the licensee is either by way of injunction or in damages. An irrevocable licence for a term implies an undertaking on the part of the licensor not to revoke it during its term and even if the licence be not specifically enforceable for any reason, a threatened breach of the licence may be prevented by enforcing this implied negative covenant by means of an injunction‑a remedy which really gives effect to the irrevocability of the licence." Certain Articles of Agreement were made between the licensor, the Governor‑ General‑in‑Council acting through the North Western Railway Administration and the licensee whereby the licensor granted to the licensee .who agreed to accept, the sole and exclusive right to sell to the travelling public newspapers, books, periodicals and the usual travellers' requisites and to erect bookstalls for the purpose on station premises under the control of the North‑Western Railway Admi nistration wherever the licensor might consider necessary. The agreement was to remain in force for a period of 5 years renew able at the option of the licensor, for a further period of 5 years on the same terms and conditions. The licence was to terminate on the expiry of 5 years without any formal notice unless it was renewed by the licensor. In consideration of the grant of the licence, the licensee agreed to pay to the licensor yearly a sum of Rs. 36,200 and to deposit a sum of Rs. 10,000 as security for the due and proper fulfilment on his part of the conditions of the agreement. Clause 11 of the agreement provided that if the sum yearly payable or the fresh security or part thereof was not paid by the licensee on the date fixed or if the licensee wilfully committed any breach of the understandings or if his work proved in any way to be unsatisfactory, or if he was found unable to conduct the business as bookstall contractor of which the General Manager be the sole judge, it would be lawful for the licensor to determine the agreement by giving one calendar month's notice to the licensee in writing. Under clause 22 on the licensee paying the yearly lump sum and performing and observing the several conditions stipulated in the agreement, the licensor agreed that the licensee should peaceably hold and enjoy the benefits and rights granted by the licensor. The licensor having determined the contract in terms of clause 11 of the agreement, the licensee instituted a suit for an injunction restraining the licensor from terminating the contract and obtained an interim injunction restraining the licensor from terminating the contract and obtained an interim injunction: Held, that the agreement created only a licence which, as it did not fall either within clause (a) or clause (b) of section 60, Easements Act, must be regarded, prima facie to be a revocable licence. If clause 22 had stood alone, it could have been held that the parties by their special contract made the licence irrevocable ; but reading clauses 11 and 22 together the position was that the licence was irrevocable if the licensee performed his obligations but if he failed to do so it would be lawful for the licensor to revoke it. In the absence of any charge of fraud or actual misconduct against the General Manager personally, and of any proof on record his decision in determining the contract could not be challenged in any Court; and such being the position, this was not a case where a perpetual injunction could possibly be issued at the hearing and therefore on principle no temporary injunction should have been granted in the case. Held further that the position would not be any different if the Easements Act did not apply and if the matter had to be governed by the general principles of law." On the point of specific performance and injunction, it was observed :‑ "Learned counsel for the respondent urges that even if the contract cannot be specifically enforced, as it implies a negative covenant, that negative covenant ought, under section 57, Specific Relief Act, to be enforced by injunction. This argument overlooks the effect of the revocability of the contract. An implied covenant is but a term of the contract and if the contract is revocable, the contract with all its terms, positive and negative, is at an end and there can be no question of enforcing any of its terms by way of a specific performance or by injunction." These latter observations it is to be noted, were made in spite of the guarantee of sole and exclusive right to sell, which guarantee is not present expressly ir, our present case. Mr. Mazahar Hassanain has drawn particular attention of the Court to the following lines of this decision :‑

"According to the principle enunciated in Hurst v. Picture Theatres Ltd. ((1915) 1 K B 1: 83 L J K B 1837), the Articles of Agreement before us does constitute a licence coupled with an interest and, therefore, is prima facie irrevocable. The facts that the licence is for a term of 5 years certain, that it was granted for valuable consideration and that it contemplated even assignment of the licensee's rights under certain conditions and that it was provided that the licensee would peaceably enjoy the grant for the full term if it performed its obligations (clause 22) certainly tend to reinforce the prima facie conclusion that the licence was intended to be irrevocable. But clauses 11 and 19 to which reference has been made appear to me to completely change the position by providing that, on the happening of certain contingencies of which the General Manager was to be the sole judge, it should be lawful for the licensor to revoke the licence. For the reasons already stated, this makes the licence revocable and the opinion of the General Manager cannot be challenged in any Court in the absence of any charge of fraud or actual misconduct on his part personally as to which there is no iota of evidence on the affidavits. Even on this basis the licence being revocable, the remedy cannot be by way of injunction for, there can be no question of preventing a person from doing what by special contract it is lawful for him to do. It is thus quite clear, whether the Indian Easements Act applies or not, that the Articles of Agreement in suit properly construed constitute only a revocable licence and the revocation thereof cannot be prevented by injunction. What other remedy the licensee may have does not require consideration in this appeal and I express no opinion in that behalf. It is enough, for the purpose of disposing of this appeal, to say that it is not a case for perpetual injunction and consequently no interlocutory injunction should have been made. This aspect of the matter which I have been considering at some length does not appear to have been brought to the notice of Falshaw, J." It will be noticed that though the feature of the licence being for five years certain and the provision that the licensee would peaceably enjoy the grant for the full term if the obligations were performed, were there in that case, nevertheless, the licence was held to be a revocable one when taken together with clauses 11, 19 and 22 of the agreement thereof which provided :‑ "

11. If the half yearly lump sum of Rs. 36,200 or the fresh security or part thereof is not paid by the licensee on the date or within the periods laid down in clause 3, whether the same shall have been legally demanded or not, or if the licensee wilfully commits any breach of the undertakings herein contained, or if his work proves in any way to be unsatisfactory, or if he is found unable to conduct the business as bookstall contractor of which the General Manager shall be the sole judge, it will be lawful for the licensor to determine this argument by giving one calendar month's notice to the licensee in writing of the intention of the licensor to determine this agreement at the expiration of the notice, but without prejudice to any rights of the licensor accruing under this agreement against the licensee or any obligation to return the sum of rupees ten thousand (10,000): Provided further that in the event of the termination of the agreement in terms of this clause the annual lump sum of Rs.‑ 36,200 deposited by the licensee in advance shall be forfeited by the licensor and the licensee shall not be entitled to the refund of the same or any part thereof.

19. Within one month from the date of the determination of this agreement, under any of the conditions of this agreement, the licensee shall remove all bookstalls together with all ad vertisements thereon or other materials or erections which may have been placed upon the property or premises of the North- Western Railway under the provisions of this agreement without any objection or claim for compensation whatever. In the event of default by the licensee, it shall be lawful for the licensor to remove or cause to remove the said stalls and materials and to sell them by auction and recover any amount due from the licensee under the terms of this agreement from the sale- proceeds, placing the balance, if any, at the credit of the licensee to be paid to them on demand.

22. On the licensee paying the yearly lump sum herein reserved and performing and observing the several conditions stipulated in this agreement the licensor agrees that the licensee shall peaceably hold and enjoy the benefits and rights granted by the licensor." In our present case the very second clause shows that it was for three years and revocable by both sides on six months' notice without assigning any cause. There is in addition clause 17(a) and clause 22 as mentioned before which make the contract or the licence clearly revocable. The main feature of irrevocability, namely, five years certain, as in the other case, is not here, nor is there in our present case the express promise of peaceable enjoyment. The facts of the next case which are very similar to our present case were that on the 8th February, 1946 an agreement was made between the Railway Administration and Rai Sahib M. Gulab Singh & Sons printers, publishers and booksellers. The Railway Administration was called the licensor and Gulab's sons being called the licensee. The licensor granted to the licensee the sole and exclusive right to sell to the travelling public newspapers, books, periodicals and other travellers' requisites and to erect bookstalls for the purpose on station premises under the control of the Railway Administration. The agreement was for a period of five years renewable at the option of the licensor, for a further period of five years on the same terms and conditions and the licensee was to terminate on the expiry of five years without any formal notice unless it was renewed by the licensor. As consideration for the licence, the licensee agreed to pay to the licensor an advance each year and‑to deposit a sum of Rs. 10,000 as security for the due and proper fulfilment of the condition of the agreement. Pursuant to this licence, the licensee set up `bookstalls in different Railway stations and the licensee also laid out considerable capital. It was alleged that between April 1947 and September 1948 the Railway Administration received several complaints against the licensee from the public, high railway officials and even from some member of the Railway Board and gave numerous warnings to the licensee. The licensee contended that these complaints were not well‑founded and that the Railway Administration must have considered the explanations of the licensee sufficient, for the matter was dropped and no further step was taken against the licensee. The Railway Administration, however, contended that no drastic step had been taken on the previous occasions as it intended to give the licence a chance to improve matters but finding that the licensee was paying no heed to the warnings, the Railway issued notice upon him stating that as the latter's work had been unsatisfactory, it was decided to determine the contract in terms of clause 11 of the agreement and notifying that the contract would stand terminated from 31st December, 1948. In reply to a letter of the licensee, the Hon'ble Shri K. Santhanam, the Minister of State for Transport and Railway,, wrote on the 29th October, 1948 stating that the termination of the contract was the result of a decision taken by the Central Advisory Council for Railways: On the 29th October 1948 the licensee through its Advocate served a notice under section 80 of the Code of Civil Procedure on the Dominion of India stating that the allegations in the notice dated the 5th October 1948 were absolutely incorrect and contending that the purported termination of the contract was illegal and mala fide and the contract could not, therefore, be terminated before 30th June, 1951. The notice concluded with the intimation that after the expiration of two months the licensee would institute a suit for an injunction restraining the Railway from terminating the contract and taking any action in pursuance of the alleged termination. The advocate of the licensee having taken objection that the last mentioned notice under section 80 of the Code of Civil Procedure was not issued by a competent authority, a fresh notice of termination was issued on the 18th November 1948 from the Railway Administration. It was alleged over again that the licensee's work was unsatisfactory and that it was found that the licensee‑was unable to conduct the business, that pursuant to clause 11 of the agreement the Governor‑General gave the licensee final notice of termination of the said agreement. In the meantime on the 5th November 1948 the licensee submitted an application offering 12 % of the gross sales for the grant of a fresh licence for bookstalls on‑ the Delhi Station for which tenders had been invited by advertisements, a fact which had been relied upon as evidencing the licensee's acquiescence in and acceptance of the termination of the previous agreement. Our clause 2 only lays down the method of revocation and that does not make the contract or licence an irrevocable one at best it makes it irrevocable except by six months' notice. There is a world of difference between an irrevocable contract and a contract that can be revoked only in a particular fashion laid down in the agreement itself. As stated before, there is no promise either of peaceable enjoyment in the present case as in the other. Whatever the observations of S. R. Das, C. J. were, even in the face of the facts of that case which were clearly more deserving of injunction, the learned Judges ultimately vacated the existing injunction order in that case. The circumstances of our, present case are surely not better. Here the appellant is "Contractor" although, whereas in the case cited the stall- vendors were characterised as licensee, although the terms and conditions of terminations in the two cases are more less similar. In that case the stall itself was erected by the licensee while in this present there was no erection of any kind by the contractor. The case being one of licence in that case and the area being Delhi where the Easements Act applied, it was observed that if the licence was an irrevocable one an injunction might be had. It was also observed incidentally that the position would not be different even if the Easements Act did not apply in a particular area, if the licence was otherwise an irrevocable one. Our present case is not strictly one of licence but of contract revocable by both sides. The Railway Administration only extended to the appellant the right to carry on business in the station premises; but there was no transfer of property in the sense that any interest in the station premises had been transferred thereby, nor is it the case that the appellant has done any work of permanent character. The decision in the case of Muhammad Ziaul Haque v. Standard Vacuum Oil Company, as 53 C W N 232 does not call for elaborate treatment inasmuch as it accepted the principles laid down in the East Punjab decision. Suffice to state that it was held therein following the East Punjab decision that a licence is revocable unless it is coupled with a grant or interest or the licensee acting upon the licence has spent money in executing works of a permanent nature. Where a licence is prima facie irrevocable either because it is coupled with a grant or interest or because the licensee had erected works of a permanent nature, there is nothing to prevent the parties from agreeing expressly or by necessary implication that the licence nevertheless shall be revocable. I There was, on the same reasoning, nothing to prevent the parties from agreeing expressly or impliedly that a licence which was prima facie revocable being not within either of the categories of irrevocable licence should nevertheless be irrevocable. Where a licence is, revocable, the licensee is entitled t reasonable notice. If, however, the licence is revoked without such notice, the remedy was by way of damages and not by way of injunction. Where, however, the licence was irrevocable and its enjoyment was obstructed by the licensor, the remedy of the licensee was either by way of injunction or in damages. It was also observed in this case that the trend of the decisions of the Calcutta High Court was to the effect that even in the case of revocation of an irrevocable licence, the only remedy was by way of damages. The case resulted in the interim injunction being dissolved. I think that these two decisions are decisive in the facts and circumstances of our present case. The appeal is, therefore, dismissed. In the circumstances of the case, however, there will be no order as to costs. The connected Rule stands discharged. Leave under clause 15 of the Letters Patent, as prayed for, is granted. K. B. A. Appeal dismissed. .