ORDER
Madan B. Lokur, J.
Caveat No. 64/2005:
1. Since learned Counsel for the Caveator has put in appearance, the caveat stands disposed of.
IA No. 5243/2005:
2. Learned Counsel for the plaintiff says that the Court fee will be paid within a week.
3. The application stands disposed of in view of the above statement.
CS(OS) 950/2005:
4. Let the plaint be registered as a suit.
5. Issue summons to the defendants.
6. Learned Counsel for defendant No. 1 accepts summons.
7. Summons may now be issued to Defendant No. 2, both by ordinary process as well as by registered post A.D., returnable before the Joint Registrar on 31st August, 2005.
8. Defendant No. 1 will file a written statement within 30 days. Replication be filed within 15 days thereafter.
IA No. 5245/2005:
9. This is an application under Order 39 Rules land 2 of the CPC filed by the plaintiff for the grant of a temporary injunction restraining the defendants, their agents and servants from permitting defendant No. 2 to print and publish the journal of defendant No. 1, namely, The Chartered Accountant’ and from selling or distributing the same till the disposal of the suit.
10. It is mentioned in the application that an agreement has been entered into between both the defendants on 24th June, 2005 whereby defendant No. 2 would be printing and publishing ‘The Chartered Accountant’, which was earlier being printed and published by the plaintiff. This is what is objected to by the plaintiff.
11. The plaintiff is a publishing house and by virtue of a license agreement dated 1st November, 1996, it began publishing the official journal of the Institute of Chartered Accountants of India (defendant No. 1), which journal is called ‘The Chartered Accountant’.
12. In terms of Clause 8 of the agreement, the relationship between the parties was to begin on the date of the first publication which was to be the November, 1996 issue. The agreement was to subsist for a period of seven years and could be automatically renewed for two further terms of seven years each subject to Clauses 8(c) and 8(d) of the agreement.
13. Clauses 8(c) and 8(d) of the agreement provided that in case the licensor (defendant No. 1) receives an offer from a third party for a similar right as granted to the licensee (the plaintiff), the licensee would be given an opportunity to match the terms and conditions of the third party and if the licensee did not agree to such terms and conditions within fifteen days, the licensor would be free to enter into a similar agreement with the third party.
14. For the sake of convenience, Clause 8 of the agreement is reproduced below–
“8(a) The term of this agreement unless previously terminated as provided in Clause 14 (a) shall begin on the date of the first publication which shall be the November 1996 issue or such later issue as may be agreed to between the parties having regard to the provisions at Clause 15 herein and shall continue for a period of 7 (seven) years from the date thereof and with a lock-in-period of three years. The lock-in-period being understood to mean the period offering no opportunity to either of the parties to terminate this agreement except six months prior to the conclusion of the 36th issue. The term of this agreement shall be renewed in favor of the Licensee provided the Licensee matches the best offer of terms and conditions received by the Licensor unless terminated in writing by the Licensee as contained hereunder.
(b) The terms of this agreement shall be automatically renewed for two further terms period of 7 (seven) years each subject to paras 8(c) and (d) below. The parties shall, however, start negotiating in good faith for such renewals 90 days prior to the expiry of each term of seven years.
(c) In case the Licensor has received offer from a third party for a similar right to sell or manufacture as that of Licensee for period of at least 7 (seven) years and which the Licensor is prepared to accept, the Licensor agrees to submit the relevant outlines of such offer in writing to the Licensee and the Licensee shall have the right to receive such an offer to liable it to consider the same and agree to match the terms and conditions contained in such offer. If the Licensee shall not give written notice to the Licensor agreeing to match such terms and conditions within 15 (fifteen) business days, the Licensor shall be free to enter into an agreement with such third party on such terms and conditions.
(d) If the Licensor has not received or accepted any offer to enter into an agreement with any third party and the Licensor and the Licensee have not agreed or otherwise agreed to any changes in the existing terms and conditions for a renewal of this agreement, then the Agreement shall be automatically renewed in favor of the Licensee for further period of 7 (seven).years each on the same terms and conditions as existing in the last year of the preceding term or on the terms and conditions so agreed.”
15. Clause 14 of the agreement between the parties provided for termination of the agreement and this reads as follows:
“14 (a) Subject to the provisions of Clauses 8 and 9 herein, this agreement can be terminated by either party by giving a written notice of its intention to do so 6 (six) months in advance of the conclusion of the lock-in period i.e. not earlier than 3th issue.
(b) In the event of earlier termination by the Licensee, the Licensor shall not be entitled to any royalty on the amount of subscription money refunded to the subscribers.”
16. During the currency of the agreement, it appears that certain modifications were required to be made in the terms of the agreement between the parties. Some modifications were first brought about through a Record Note of Discussions between the parties on 16th May, 2001 in which it was agreed, apart from certain financial terms, that the arrangement, as modified between the parties, would continue till March, 2002 and would be renewable through mutual concurrence. The other clauses of the agreement dated 1st November, 1996 between the parties remained unchanged.
17. Subsequently, there was a Memorandum of Understanding between the parties on 27th February, 2003 which covered the period between May, 2002 to July, 2003. Certain terms were agreed to in this Memorandum of Understanding between the parties.
18. There was a second Memorandum of Understanding between the parties on 28th October, 2003 which reproduced the terms mutually agreed upon between the parties on 19th September, 2003. The second Memorandum of Understanding was to cover the period from 1st July, 2003 to 30th June, 2004. Thereafter, it appears that some ad hoc arrangement continued between the parties with regard to printing the journal ‘The Chartered Accountant’.
19. The plaintiff has placed on record some letters exchanged between the parties and it appears that one of the outstanding issues between the parties related to the quality of paper to be used for printing the journal (and, therefore, I suppose, the printing cost also). The disputes between the parties were not resolved, and, as it appears from a letter dated 16th June, 2005 sent by defendant No. 1 to the plaintiff, the process of selection of a printer and publisher for the journal started on 11th May, 2004. It is important to note that in this process, a number of organizations, including the plaintiff, had participated.
20. In the letter dated 16th June, 2005 sent by defendant No. 1 to the plaintiff, it Was mentioned that several rounds of negotiations and discussions were held between the parties but since no mutually acceptable arrangement could be arrived at, defendant No. 1 had decided to terminate the printing arrangement with the dispatch of the June, 2005 issue of the journal ‘The Chartered Accountant’ and that this had already been communicated to the plaintiff some time in May, 2005 and again on 15th June, 2005. Its soon thereafter that defendant No. 1 and defendant No. 2 entered into an agreement, thereby giving cause to the plaintiff to approach this Court.
21. Learned Counsel for the plaintiff submitted that the agreement of November, 1996 entered into between the parties was still subsisting and in terms thereof the plaintiff was entitled to continue to publish the journal “The Chartered Accountant’. Apart from this, it was also submitted that the termination was without any reason at all and would have an effect on the reputation of the plaintiff as a printer and publisher of some standing.
22. During the course of hearing, learned Counsel for defendant No. 1, who was on caveat, submitted that vital correspondence had been withheld by the plaintiff and that a true picture was not placed before this Court. He placed on record an affidavit of Dr. Ashok Haldia, Secretary of defendant No. 1 along with some documents. One of the documents annexed to this affidavit is an e-mail dated 11th December, 2004 sent by the plaintiff to defendant No. 1. The first paragraph of this e-mail is of considerable significance and it indicates that it was understood between both the parties that the agreement entered into in November, 1996 had finally come to an end in June, 2004 as per the second Memorandum of Understanding dated 28th October, 2003. The first paragraph of the e-mail dated 11th December, 2004 reads as follows:
“We would like to bring to your attention some of the issues which require settlement between ICA and LMI:
In context of your mail of 8th Nov., 2004, we continued to print Nov. and Dec., 2004 issues under the Old Agreement which expired with printing of June 04 issue. We understand that the Institute is already working on renewal of the Agreement with upgraded quaity of paper both for text and cover for which we have already submitted our Quotation on 24th June, 2004 and also offered necessary discounts vide our mail of 22nd Nov., 2004. We trust that the contract would be discussed for its finality between the President and our Finance Director, Mr. Anil Mehra. Please can you let us know the status for printing of the Journal for Jan., 2005 and onwards.”
23. I am of the view that, prima facie, the e-mail above mentioned completely takes the wind out of the sails of the plaintiff. From July, 2004 onwards the parties had been carrying on their relationship on the basis of some ad hoc arrangement, with the plaintiff continuing to print the journal on behalf of defendant No. 1. But, the parties had quite clearly understood that the existing arrangement entered into in November, 1996 had effectively come to an end but was enduring by virtue of the Record Note of Discussions of 16th May, 2001, the Memorandum of Understanding dated 27th February, 2003 and the second Memorandum of Understanding dated 28th October, 2003.
24. From a perusal of the available documents, it does appear that the selection of a printer and publisher started on 11th May, 2004 as above mentioned. On 24th June, 2004 (and later) the plaintiff gave various options to defendant No. 1 and these appear to have been examined by the said defendant. Discussions between the parties were held with regard to the quality of paper and rate, etc. till some time in November, 2004. It appears from an e-mail dated 8th November, 2004 sent by defendant No. 1 to the plaintiff that the rate quoted by the plaintiff was at least Rs. 10/- higher than the rates given by other top three vendors. This was brought to the notice of the plaintiff who was unable to match the rates as is apparent from an e-mail dated 22nd November, 2004 sent by the plaintiff to defendant No. 1.
25. The e-mails dated 8th November, 2004 and 22nd November, 2004 are of some importance and for this reason they are reproduced below:
e-mail dated 8th November, 2004
“To, Mr. J.N. Chopra GM, F and A, Thompson Press New Delhi.
Sir,
This is with reference to your quotation, dated 24.6.2004, regarding publication of ICAI journal ‘The Chartered Accountant’.
As instructed by Director CPE Dr. B. Chakravarty, this is to bring to your notice that the rate quoted by you (post discount Rs. 30.32 with 70 GSM LWC inside pages, all in 4 colour) is at least Rs. 10 higher than the rates given by other top three vendors.
We appreciate the infrastructure and reputation of the LMI to handle the job but would still like to know as to what extent can you further lower the price quoted by you for printing of the journal (inclusive of content designing, marketing and greater benefits) so that it can reasonably match with the price quoted by others. Regards.
Nadeem Ahmed Assistant Secretary (Journal, ICAI).”
e-mail dated 22nd November, 2004
“Mr. Nadeem Ahmed Assistant Secretary (Journal, ICAI)
PO Box 7100,
Indraprastha Marg, New Delhi-110 002.
In reference to your mail of 8th Nov., 2004 we would like to advise that we had already sent our Quotation on 24th June, 2004 giving various options.
During our telecon, you have now asked for the final quote for CA Journal to be printed in 128 + 4 pages all in FC for which we submitted our quote of Rs. 36.26 per copy and offered a discount of 15% and another additional discount of 5% where the Institute places a deposit equivalent to 3 months stock of paper.
You would thus appreciate that the initial quote of Rs. 36.26 per copy has already been discounted by 20% i.e. Rs. 7.25 per copy and after considering credit for advertisement income @ Rs. 1.30 per copy, the net chargeable rate would work out to Rs. 27.71 per copy.
You will have to bear in mind that the quote given by other parties which presumably is around Rs. 20/- to Rs. 22/- per copy does not even cover the basic cost of paper and printing and it is beyond our understanding as to how one can quote such a low figure where even the basic cost is not covered. We hope that other parties would be using the same quality of paper as desired by you and would be able to give high quality printing especially in view of the high quality-paper being used. There is no point of using high quality of paper with low quality printing.
Since the paper prices are on the rise and likely go up by another 10% w.e.f. 1st Jan. ’05 and the quote of Rs. 27.71 per copy given to you earlier was worked out on paper cost at the rates prevailing at that time and therefore looking into the current paer prices, the quote of Rs. 27.71 per copy is already a discounted one. However, as a very a special case, we agree to retain this quote till 31.03.05, thus, safeguarding the Institute for any further escalation in the paper prices.
Please let us know in case you need any further clarification.
Thanking you,
Yours faithfully,
For Living Media India Limited
(J.N. CHOPRA)
cc: B. Chakravorty”
It is thereafter that the plaintiff sent the e-mail dated 11th December, 2004 which, as already referred to above, clearly suggests that both the parties had understood that the agreement entered into between them in November, 1996 had already expired with the printing of the June, 2004 issue of The Chartered Accountant’.
26. It appears to me that it is not as if defendant No. 1 has taken an arbitrary decision without taking the plaintiff into confidence — negotiations appear to have been going on between the parties throughout 2004; quotations were invited by defendant No. 1 from other publishers and the correspondence suggests that the plaintiff was unable to match their rates. This left defendant No. 1 with no option but to terminate the arrangement, which was in any case enduring on an ad hoc basis.
27. The contention of learned Counsel for the plaintiff that the November, } 1996 agreement still subsists is completely belied by the stand taken by the plaintiff in its correspondence, particularly its letter dated 11th December, 2004 This being the position, the contention urged by learned Counsel for the plaintiff in this regard must be rejected.
28. Insofar as the reputation of the plaintiff is concerned, I am of the view that the arrangement between the parties was purely a commercial arrangement and that the arrangement was terminated for commercial reasons. No allegation has been made against the plaintiff that its work was not up to the mark or was in any other way sub-standard. Under these circumstances, I do not see how there can be any adverse impact on the reputation of the plaintiff if a simple commercial transaction between the parties comes to an end because they are not able to agree to certain terms.
29. Learned Counsel for defendant No. 1 pointed out that the journal ‘The Chartered Accountant’ is intended for circulation amongst members of defendant No. 1. These members have paid subscriptions and if an interim injunction is granted, as prayed for by the plaintiff, the publication of the journal would have to be suspended which would cause a huge loss not only to the reputation of defendant No. 1 but would also create unnecessary complications insofar as the subscribers of the journal, who are not conncted with the dispute, are concerned. The journal has been in print for over 50 years and under these circumstances, the balance of convenience does not, under any circumstances, lie in favor of the prayer of the plaintiff being granted.
30. I am of the view, on an overall consideration of the facts of the case, that the plaintiff has not been able to make out a prima facie case for the grant of any injunction as prayed for. There is also no balance of convenience in favor of the prayer of the plaintiff being granted. No case of any irreparable loss or injury has been made out by the plaintiff because it is not as if its entire business will come to a standstill. On the contrary, it appears that irreparable loss and injury would be causd to defendant No. 1 if an injunction, as prayed for, is granted.
31. The application is, therefore, dismissed. It is, however, made clear that any expression of opinion is only for the purposes of deciding this application and will not, of course, bind any of the parties during the trial of the case.
32. Defendant No. 1 will be entitled to costs of Rs. 11,000/-.