SYED HASAN AZHAR RIZVI, J.---- C.M.A. No.7345/2020 under Order XXXIX, Rules 1. and 2 read with Section 151, C.P.C., filed by the plaintif fs, seeking a restraint order against the defendants from promoting the motion picture 'Ishrat Baji Made in China' or 'Ishrat Made in China' or any motion picture with any other title on radio, television, social media, cinemas etc. and/or from releasing the same during pendency of the instant suit, while C.M.A. No.7346/2020 under Order XCIV read with section 151, C.P.C. seeking appointment of an independent chartered Accountant for forensic audit of the accounts, finances and expenses in respect of the Project/Subject Motion Picture 'Ishrat Baji Made in China' or 'Ishrat Made in China' or having any other name. As there are common questions of law and facts involved therein, both the above applications are being disposed of through the instant consolidated order .
2. Brief facts of the case are that plaintif f No.1 is a company incorporated in the United Arab Emirates and is engaged in the business of publishing and media management and plaintif f No.2 is a shareholder of the plaintif f No.1. The. defendant No.1 is an actor and producer of television serials, telefilms and films, whereas the for defendant No.2 is an entity owned by the defendant No.1 and is engaged in the business of film production. The defendants Nos. 1 and 2 approached the Plaintif fs for investment in a movie vide email dated 18.09.2017 and represented a time line for completion vide e-mail dated 23.02.2018. It is averred that the plaintif fs Nos.1 and 2 entered into an Agreement dated 11.06.2018 with the defendants Nos.1 and 2 to make and produce Urdu feature film titled as "Ishrat Baji Made in China". As per the Agreement, the plaintif fs had undertaken to carry out the role on an "Investor", whilst the defendants Nos.1 and 2 had undertaken to carry out the role as a "Produce" with the obligations of each party listed out in the Agreement. It is further averred that the plaintif fs had initiated payments in accordance with the agreement, and till date have paid a total of Rs.38,380,561/- which is an admitted fact. All payments have been released as per Clause 6(iv) of the agreement i.e. as per the need and requirements of the Project. The defendants Nos. 1 and 2 have never alleged any breach on the ground of "late payment" or non- payment. Admittedly not a single notice of breach was ever issued to the plaintif fs on this ground or any other ground till date.
3. Counter-af fidavits have been filed by the defendants Nos.l and 3 wherein categorically denied the contents of the applications under reply . It is submitted that that the plaintif fs failed to fulfill their obligations and never released any payments in accordance with the aforesaid arrangement provided in Schedule 2 of the Agreement. It is evident that the completion of the project was delayed due to the defaults made by the plaintif fs, and as a consequence thereof the cost of the project exorbitantly increased. Even otherwise, the plaintif fs have never shown willingness or commitment towards the payment of the remaining amount of more than Rs.25,000,000/-. Furthermore, any such statement showing willingness towards payment of the remaining amount is conspicuous by its absence in the plaint filed in the suit under reference. Therefore, the application for interim relief has been filed in violation of the settled principle of law that "the power conferred under Order XXXIX, Rules 1 and 2 of the Civil Procedure Code, 1908. is discretionary . The discretionary relief cannot be granted to parties approa ching Court with unclean hands and ulterior motives." Accordingly , the aforementioned conduct of the plaintif fs disentitles them from seeking injunctive relief in the present circumstances.
4. Plaintif fs filed affidavits-in-rejoinder to the counter-af fidavits and denied each and every averment made therein.
It is stated that counter-af fidavit filed by Yasir Bajwa the personal assistant of the defendant No.1 therefore it is clear that the defendant No.3 is in fact an entity or front owned by the defendant No.1 himself and such entity has been created to show alleged third party investment to defeat the rights and to usurp the investment of the plaintif fs. It is denied that the applications under reply are frivolous, baseless, misconceived and non-maintainable.
The instant suit as well as the applications under replies are not only maintainable but also liable to be allowed.
The defendants Nos.1 and 2 clearly breached various clauses of the agreement dated 11.06.2018 whereas the defendant No.3 is a stranger hence the plaintif fs are entitled to relief as claimed. The agreement clearly set out the obligations of the parties and clearly provides restrictive covenants and this Court is empowered. to pass injunctive orders in respect thereof and in particular to protect the plaintif fs from the breaches and unlawful conduct of the defendants.
5. I have heard Mr. Ayan Mustafa Mem on, learned counsel for the plaintif fs, Mr. Abdul Sattar Pirzada, learned counsel for the defendant No.1 and Mr. Mamoon Chaudhry , learned counsel for the defendant No.3, so also perused the available record.
6. Learned counsel for the plaintif fs in support of the listed applications has argued that on 11.06.2018 plaintif fs and defendants Nos.1 and 2 entered into an agreement to make and produce Urdu feature film titled as "Ishrat Baji Made in China" . He has argued that as per agreement the plaintif fs had undertaken to carry out the role on an "Investor", whilst the defendants Nos.1 and 2 had undertaken to carry out the role as a "Producer" with the obligations of each party mentioned in the agreement. He has contended that the plaintif fs had initiated payments in accordance with the agreement, and till date have paid a total of Rs.38,380,561/- which is an admitted fact. He has further contended that all payments have been released as per Clause 6(iv) of the Agreement i.e. as per the need and requirements of the Project. The Defendants Nos. 1 and 2 have never alleged any breach on the ground of "late payment" or non-payment. He has urged that admittedly not a single notice of breath was ever issued to the plaintif fs on this ground or any other ground till date. He has also urged that the plea of the defendants Nos. 1 and 2 of delayed payment in their counter-af fidavit is nothing but a mere afterthought. He has contended that it is also an admitted fact that the defendants Nos. 1 and 2 have not disbursed the reciproca l 20% investment to be made by them, as to date the plaintif fs had neve r been provided with the financial statements and business reports as required under the agreement, and thus the plaintif fs were entitled to withhold any further payments until proper accounts were made available which is any case are to be disbursed as per need and requirement of the Project.
7. Learned counsel for the plaintif fs has further contended that on 15.02.2019 the defendants Nos. 1 and 2 issued an email to the plaintif fs and requested for balance payment. He has also contended that as per the defendants Nos. 1 and 2 during arguments the plaintif f disappeared after that e-mail. However , such assertion is factually incorrect as the plaintif fs made a payment of Rs.44 Lacs to the Defendants Nos. 1 and 2 on 15.03.2019, this payment was duly accepted by the Defendants Nos.1 and 2 and no notice of breach was ever issued. He has submitted that as a matter of law, this amounts to "Affirmation of the Agreement" as per Section 39 of the Contract Act. He has reiterated that the defendants Nos. 1 and 2 did not elect to exercise the termination clause at any stage which is also an admitted. He has submitted that insofar as the plaintif fs email dated 06.03.2020 is concerned, he has urged that the defendants No.1 had on 06.03.2020, via Skype informed the plaintif f No.2 that investment beyond the agreed amount is required and a few options were informally discussed amongst the parties, but never agreed upon, which were clearly stipulated in the email dated 06.03.2020 sent from the plaintif f No.1 to the defendant No.1. However , the defendant No.1 never responded to the said email and never agreed to any of the options.
Thus, the plaintif f No.2 on 16.03.2020 sent another email to the defendant No.1 reminding him that the original Agreement dated 11.6.2018 stood intact. He has urged that subsequently to the shock and utter dismay of the plaintif fs, the defendants had unlawfully omitted the name of the plaintif fs from all the new promotional material in respect of the Project. He has vehemently contended that in glaring breach of clauses 8 and 9 of the Agreement as well as Clause I, Schedule II a 3rd party entity known as "EK ALIF FILM" ,.(Defe ndant No.3) was mentioned on every single promotional post, which prompted issuance of legal notice dated 11.07.2020 and filing of the instant Suit as before this the name of the plaintif fs appeared in the promotion material. He has further contended that the defendants Nos. 1 and 2 have always taken the Plaintif fs for granted which can be clearly seen from their conduct.
He has further vehemently urged that the defendants Nos. 1 and 2 never responded to the e-mails dated 06.03.2020, 16.03.2020, legal notice dated 11.07.2020 and unilaterally decided to include a third party and remove the names of the plaintif fs from the promotional material. He has also vehemently contended that the defendants Nos. 1 and 2 never alleged breach and never invoked the termination clause which clearly goes to show that there has been no breach on the part of the plaintif fs.
8. Learned counsel for the plaintif fs on legal plane has argued that an injunct ion can be granted to restrain repetition or continuance of breach of the agreement by the defendants Nos.1 and 2 to the agreement, as stipulated under Order XXXIX, Rule 2 regardless of whether compensation in money is adequate relief. He has contended that the agreement dated 11.06.2018 is a continuing agreement and the defendants Nos.1 and 2 are continually breaching such agreement, hence this Court can prevent the breach through grant of injunction as per the clear provision of Rule 2 of Order XXXIX, C.P.C. regardless of Section 56 of the Specific Relief Act. He has urged that this Court can always issue an injunction to enforce a negative covenant as stipulated under Section 57 of the Specific Relief Act, 1877. He has submitted that the defendant No.1 is evidently breaching Clauses 8 and 9 as well as Clause I of Schedule II of the Agreement dated 11.06.2018 which are in the nature of negative covenants hence an injunction to prevent third party from participating in the project in any manner can be issued by this Court irrespective of Section 56(f). Learned counsel has further argued that plaintif f absolved from showing his willingness to perform when breaches of defendant Nos.1 and 2 are floating on the surface of the record whereas the plaintif fs have not committed any breach which is evident from the fact that no notice for breach was served upon the plaintif fs. Further , all payments have, been made by the plaintif fs as per the need and requirement of the Project in compliance with the agreement. He has submitted that in any event, it is settled law that in case breaches of defendants are pointed out, it is not incumbent on the Plaintif f to show his willingness to perform the Contract. Therefore, it is clear that the plaintif fs have remained and are still willing to perform all their obligations under the Contract as long as the reciprocal obligations of the defendant Nos. 1 and 2 are complied with. He has urged that the defendant No.1 by accepting-the payments and thereby deriving the benefit of such payments from the plaintif f No.2, has affirmed the Agreement dated 11.06.2018 thus the allegation of delayed payment leading to termination is merely an afterthought and of no effect. As a matter of fact, the defendants Nos. 1 and 2 never exercised Clause 21 of the Agreement. He has submitted that this is a termination clause however it required the defendants Nos. 1 and 2 to first give a notice of breach and allow 14 days for rectif ication of the alleged breach. He has vehemently urged that all payments were made as per Clause 6(iv) of the Agreement, however , in case the defendants Nos. 1 and 2 felt that paymen t was overdue a notice under Clause 21 could have been issued which would have enabled the plaintif fs to rectify any alleged breach. He has submitted that this right of the plaintif fs has been totally ignored by the defendants. He has drawn attention of this Court to paragraph 11 of the counter-af fidavit of defendant No.3, wherein it is alleged that due to breaches of plaintif fs the defendants Nos. 1 and 2 were compelled to explore other opportunities. He has submitted that there can be no allegation of breach without actually issuing a notice of breach which was never issued. He has submitted that as a matter of fact by accepting payments from plaintif fs, the Agreement stood af firmed thus the excuse of breach is untenable.
9. Learned counsel next contended that defendants Nos.1 and 2 never agreed to the proposal in the e-mail dated 06.03.2020, the excuse of being in Thailand is of no consequence as defendants No.1 and 2 had access to Internet. He has urged that even otherwise offer if any stood revoked vide email dated 16.3.2020 and then upon issuance of legal notice dated 11.07.2020 . He has submitted that Section 7 of the Contract Act provides essential ingredients of a contract which are missing from the e-mail dated 06.3.2020. He has, therefore, urged that the defendants Nos.1 and 2 not only have unclean hands but their, mala fide intentions are clear and apparent on the face of the record. He has submitted that after taking the seed money for the project they have unlawfully attempted to usurp the plaintif f's rights by systematically attempting to exclude the plaintif fs. He has, therefore, prayed for grant of applications for Injunction and Forensic Audit as the plaintif fs have made out a prima facie case, the balance of convenience lies in their favour and they will suffer irreparable loss in case the application is not granted.
10. In support of his submission, learned counsel has placed reliance upon the cases reported in PLD 1998 Karachi 277, 1993 CLC 2497 , 1980 SCMR 588, PLD 1983 Karachi 387, 1979 CLC 570, 2014 CLD 1583 , PLD 1981 Karachi 720, (1996) 1 CALL T 214 HC India, PLD 1973 SC 39, 2012 CLD 1225 , PLD 1991 Lahore 174, 1995 SCMR 1431 , 2002 CLD 218 , PLD 2006 Karachi 523 , PLD 1982 Karachi 76 .
11. Mr. Abdul Sattar Pirzada, learned counsel for the defendant No.1 has argued that the instant applications have been filed in complete disregard to the settled principle of law that the power conferred under Order XXXIX Rules 1 and 2, C.P.C., is discretionary , which cannot be granted to parties approaching Court with unclean hands and ulterior motives. He has argued that a bare perusal of the plaint shows that the sole purpose, aim and objective of the plaintif fs in filing the suit and the applications under reply is to coerce, extort, intimidate and unlawfully complete the defendants into surrendering to the unlawful, extortionate and ludicrous demands of the plaintif fs. He has further argued that it has been consistently held by the apex Courts that the plaintif fs cannot seek specific performance of an expired agreement and therefore if enforcement of the expired agreement cannot be sought, the necessary corollary is that no injunctive relief can be asked for. He has further argued that perusal of the Production Frame Work Agreement dated 11.06.2018 has expired after a period of twelve months pursuant to its execution and as a consequence thereof the agreement stood revoked after the said date hence no vested right has accrued in favour of the plaintif fs and accordingly no injunctive relief could be sought in the exigencies of the given circumstances. He has also urged that plaintif fs have failed to establish a prima face case; the balance of convenience is not in their favour and the plaintif fs will not suffer irreparable loss, if injunctive relief will not be granted to the plaintif fs as prayed. He has also argued that it is a well settled law that if the loss is measureable in terms of money , injunction cannot be granted. He has referred to Section 56(i) of the Specific Relief Act, 1877 that an injunction shall not be granted when equally efficacious relief can be obtained by any other usual mode of proceedings. He has urged that plaintif fs have prayed for rendition of accounts in respect of the agreement and therefore the breach, if any, can be measured in terms of money , as such, the question of irreparable loss caused to the plaintif fs does not arise. He has submitted that when a suit is non-maintainable the injunction can also not be granted.. He has therefore, urged that suit is barred under Sections 21 and 56 of the Specific Relief Act, 1877 as no cause of action has accrued to the plaintif fs to file the instant suit
12. Learned counsel for the defendants has argued that a production framework agreement was executed on 11.06.2018 inter se the plaintif fs and Defendants Nos. 1 and 2. He has made reference to the various clauses of the agreement, including clause 6(ix) which relates to commitment and timely provision and availability of funds by the Investor as detailed in approved budget shall be the essence of this agreem ent. He has submitted that the modalities in respect of profit sharing are expressly provided in. Clause 7 of the agreement, which reads as under:- i. The Investor shall invest an amount of PK.60,000,000/- which shall be disbursed as per the schedule attached herewith. ii. The profit shall be shared as per 75:25 ratio between the parties (Investor : Producer). iii. The net profit as defined in schedule shall be calculated and onward distribu ted between the Producer and Investor as per the following arrangement; Investment shall be recouped first; After recouping the investment amount , the net profit, as per its arrival, shall be distributed as per investment amount basis between the Procedure and Investor; iv. The Producer and Investor shall also share loss, if any , as per their respective share of investments;
13. He has also made reference to Clause 8 of the Agreement, which is provided that if further financing or investment is required, the parties with the mutual consent will decide to invest further or borrow from any bank or financial institutions or from such other persons or parties at such rates in the best interest of project. However , in case of third party investment, the Producer's profit sharing ratio shall not be changed and affected in any manner .
He has further added that in terms of Clause 21 of the agreement, the parties have the right to terminate the agreement. He has further made refere nce to Clause 23 of the agreement which provides that all costs of production that have been mobilized and present on expense sheet till the date of termination will be compensated accordingly on immediate basis by the Investor . He has argued that the responsibilities of the Investor as per Schedule 1 of the Agreement, inter alia, includes provision of timely funds/investments as per the agreed schedule of production management. He has urged that it is categorically provided in Clause A(2) in Schedule 2 of the Agreement, that the amount of Rs.60,000,000/- shall be released by Investor to Producer as per the following arrangement:-
(a) Rs. 12,500,000/- upon execution of the Agreement;
(b) Rs. 17,500,000/- September 2018;
(c) Rs. 15,000,000/- November 2018;
(d) Rs. 15,000,000/ - January 2019;
14. Learned counsel for the defendants has urged that it is duly evidenced from a bare perusal of the documents annexed along with the plaint that the Plaintif fs failed to fulfill their obligations and never released any payments in accordance with the aforesaid arrangement provided in Schedule 2 of the Agreement. He has drawn attention of this Court to an email dated 15.02.2019 whereby a representative of defendants Nos. 1 and 2 informed the plaintif f about the default in making payments that the plaintif fs failed to fulfill their obligat ions towards defendants Nos. 1 and 2 in accordance with the payment mechanism stipulated in Schedule 2 of the Agreement and requested the plaintif fs to fulfill their obligations by paying the balance amount. He has urged that plaintif fs responded to the said email after a lapse of one year through email dated 23.02.2020, which reflects that even the first installment was not paid by the plaintif fs in accordance with the agreed payment mechanism provided in Schedule 2 of the agreement. He has urged that even then the plaintif fs failed to pay an amount of more than Rs.25,000,000/- out of the agreement amount. He has argued that the completion of the project was delayed due to the default made by the plaintif fs and as a consequence thereof the cost of the project exorbitantly increased. He has, therefore, urged that facing such situation, the defendants Nos.1 and 2 were constrained to seek other investment opportunities due to failure of the plaintif fs to fulfill their obligations under [he agreement, the defendant No.3 made investment in order to facilitate completion of the project. He has submitted that the details of investment made by the defendant No.3 reflects from the annexures attached with the counter-af fidavit filed by defendant No.3.
15. Learned counsel for the defendants Nos.1 and 2 has next argued that the involvement of the third party investor was well acknowledged by the plaintif fs in their email dated 06.03.2020. For ready reference the said email is reproduced hereunder:- "With reference to our discussion on Skype, I can understand that the film cann ot be completed in the initially estimated budget of Rs. 60 million.
As per your recommendation there is an investor who is helping completing the film.
Moving forward the total amount invested by you (Mohib Mirza), me (Syed Waqar. Haider Zaidi) and the investor can be totaled once the films get completed and all 3 parties can share holder according to the amount invested.
The amount invested to be returned accordingly with the revenue starts coming in. The profit share can be mutually agreed once all the invested amount is returned to all parties. If agreed this is to be formalized as soon as possible.
We can also work on complete buy out option, the difference will be a percentage of invested amount (at least 50 percent) to be settled right away remaining can be clone once the film releases on the formula mentioned above, the percentage of the amount will change accordingly , there will be no profit sharing in second option."
16. Learned counsel for the defendants has submitted that it is acknowledged by the Plaintif fs in the aforementioned email that the budget of the Project far exceeded the initial budget of Rs.60,000,000/-. He has drawn attention of this Court to the docum ents enclosed along with the counter-af fidavit of defendants Nos. 1 and 2 which shows that the amount of more than Rs.170,000,000/- (Rupees One Seventy Million) has already been invested in the Project. He has further argued that the expenditure in respect of the Project also increased as the team involved therein, was unfortunately stranded in Thailand due to the outbreak of COVID-19 coronavirus, which was widely disseminated in electronic and print media. He has urged that the documents produced on record by the plaintif fs clearly testify to the fact that the plaintif fs have never shown willingn ess or commitment towards the payment of the remaining amount of more than Rs.25,000,000/-. Furthermore, any such statement showing willingness towards payment of the rema ining amount is conspicuous by its absence in the plaint filed in the suit under reference. He has therefore argued that the plaintif fs instead of abiding by the terms and conditions of the Agreement, instituted the instant suit wherein essentially specific performance of the Agreement was sought, the plaintif fs also filed applications for forensic audit and injunction application and by misleading this Court procured an ad interim order dated 27.08.2020 against the defendants, who are restrained to release the television, social media, motion picture titled "Ishrat Baji Made in China" or "Ishrat Made in China" or by changing its title in any manner".
17. Learned counsel for the defendants Nos.1 and 2, on legal plane, has argued that the agreement is not enforceable as set out in Section 21 of the Specific Relief Act, 1877, which provides that a contract for the non- performance of which compensation in money is an adequate relief. He has argued that it is stipulated in Clause 23 of the agreement that all costs of production that have been mobilized and present on expense sheet till the date of termination will be compensated accordingly on immediate basis by the investor . He stated that Clause A(4) in schedule 2 of the agreement that if there is any change in the production cost due to delay in the responsibilities taken up by any of the party and unavailability of any financial resource by the parties, the party who is responsible for such default will be liable to compensate the same with the mutual consent. He has contended that a mechanism pertaining to the remedy of compensation has been duly Provided in the abovementioned clauses of the agreement. Therefore, the agreement is not specifically enforceable and it is expressly provided in Section 56(t) of the 1877 Act that injunction cannot be granted to prevent the breach of a contract the performance of which would not be specifically enforced. He has further contended that it is a trite law that injunction cannot be granted where damages or compensation is an adequate remedy . In support of this argument, learned counsel has placed reliance upon a judgment passed by this Court in the case of Messrs Pakistan State Oil Company Limited v.
Federation of Pakistan ( 2010 CLC 1843 ), wherein it has been held that: "It is clear from the aforesaid section that if plaintif f deems that the defendant No. 4 has committed breach of an obligation resembling those created by contract has been incurred and has not been discharged, the plaintif f may claim compensation subject to the explanation attached with the section that in estimating loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non- performance of the contract must be taken in to account and such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. The similar provisi on is available under Section 21 of the Specific Relief Act, which provides under clause (a) that a contract cannot be specifically enforced for the non-performance of which compensation is an adequate relief and another clause (d) further provides that a contract which in its nature is revocable can also not be specifically enforced. Since the license agreements/agency/dealership agreements and franchising agreements are revocable their nature, therefore, at the best, the aggrieved party can claim damages/ compensation for its alleged breach subject to proof."
18. He has also contended that similar principle has been followed by the superior courts in the following judgments: Zawar Petroleum v . O.G.D.C ( 2003 YLR 1450 )
Nadeem Ghani v . UBL (2001 CLC 1904 )
District Council Gujrat v . Iftikhar Ahmed ( 1988 MLD 1461 )
19. Learned counsel has further argued that a contract which runs in to such minu te or numerous details, or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the Court cannot enforce specific performance of its material terms. He has submitted that a bare reading of Clause 1 of the agreement clarifies that it is executed for a continuous or ongoing term and the completion of the Project is not limited to development phase, pre-production, production, post production etc. He has submitted that the 'execution and completion of the Project runs into minute or numerous details and is apparently dependent on the personal qualifications or volitions of the parties to the agreement. As such, the agreement is not specifically enforceable and injunction cannot be granted in the exigencies of the given circumstances. In this regard, he has placed reliance on the case of Lahore Stock Exchange Ltd. v. Messrs Hassan Associates (2010 MLD 800), wherein it was held as under: "There was a settled consideration paya ble to the respondents under the said agreement, dated 3.5.1997 which was modified vide the supplementary agreement, dated 11.10.2001 on the face of it such an agreement was not specifically . enforceable as the only entitl ement of the respondents qua considera tion was mentioned, thus, stood measured in pecuniary terms. The Agree ment pertained to and was dependent upon the personal professional qualification of the respondents and ran in to minute and numerous details qua designing and planning, which could never be over seen by any Court of law. Such elemental principle in this beha lf is enunciated in Section 21 of the Specific Relief Act, 1877, and, therefore, in view of Section 56(0 of the Specific Relief Act no injunction could be granted to restrain the breach thereof."
20. Learned counsel for the defendants Nos.1 and 2 has also argued that in terms of Clause 21 of the agreement, the parties are vested with the right to terminate the Agreement. Therefore, the agreement is clearly revocable in nature and injunction cannot be granted. He has further contended that if the court is satisfied that the circumstances of the case do not entitle the grant of a perpetnal injunction, a temp orary injunction is perforce to be refused. In this regard, he has placed reliance on the judgment reported in the case of Bank Alfalah Limited v.
Neu Multiplex and Entertainment Square Company (2015 YLR 214), wherein it has been held that: "In so far as agreements/contracts with termination clauses are concerned any such agreements/contracts which are breached by one party could not be subjected to specifically performed. Such agreements are to be seen within the frame of section 21 of the Specific. Relief Act which provides mechanism in respect of those contracts which are not specifically enforceable; one such condition that in available in section 21 is (d) which says that the contracts which, are in the nature of revocable cannot be enforced. No doubt a breach of such agreement has been pleaded by the plaintif f however when such conditions as available in section 21 are applied to the instant case, its breach apparently cannot be prevented by way of passing any injunctive order ."
21. Learned counsel for the defendants has contended that learned counsel for the plaintif fs has given much emphasis to Sections 56 and 57 of the Specific Relief Act, 1877, which do not help the plaintif fs' case for the simple reason that an injunction cannot be granted when equally efficacious relief can certainly be obtained by any other usual mode of proceedings except in case of breach of trust. He submitted that the plaintif fs failed to fulfil their obligations and never released any paym ents in accordance with the aforesaid arrangement provided in Schedule 2 of the agreement. He has urged that the completion of the project was delayed due to the defaults made by the plaintif fs and as a consequence thereof the cost of the project exorbitantly increased. He has submitted that even otherwise the plaintif fs have never shown willingness towards the payment of the remaining amount of more than Rs.25,000,000/-. He has further contended that due to the aforementioned conduct of the plaintif fs, they cannot by any stretch of imagination, invoke Sectio n 57 in the present circumstances as it is expressly provided in the said section that "notwithstanding section 56, Clause (f), where a contract comprises art affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstances 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. He has, therefore, submitted that the plaintif fs have failed to fulfil their obligations under the agreement and therefore they are precluded from seeking relief under the said provision.
In support of his submission, he placed reliance upon the case of Yusuf Hussain Shirazi v. Lt. Col. Muhammad Aslam Shaikh (PLD 1966 (W .) Karachi 472.
22. Learned counsel for the defendants has argued that the case law cited by the learned counsel for the plaintif fs are distinguishable from the facts and circumstances involved in the instant case as in the present case the terms and conditions of the agreement cannot be categorically determined, as such, said judgments are not applicable to the case in hand.
23. In the end, learned counsel for the defendants has submitted that through an email dated 15.02.2019; a representative of defendants No. 1 and 2 informed the plaintif fs about the default in making payments. It was clarified in the said email that the plaintif fs failed to fulfill their obligations towar ds defendants Nos. 1 and 2 in accordance with the payment mechanism stipulated. in Schedule 2 of the Agreement. Resultantly , defendants Nos.
1 and 2 were constrained to seek other investment opportunities from defendant No. 3 in order to facilitate completion of the Project. In view of the foregoing, it is evident that the plaintif fs have failed to establish prima facie case, the balance of convenience does not lie in their favour and they will not suffer irreparable loss and harm. He has, therefore, prayed for dismissal of listed applications.
24. In rebuttal, learned counsel for the plaintif fs has contended that during arguments the following glaring breaches of the defendants and admitted facts have surfaced: i. In the documents attached by the defendants Nos. 1 and 2 to justify expenses , there are glaring irregularities.
The defendants No. 1 has paid himself huge sums of money under various heads and has siphoned off funds through huge cash payments made to his own assistant. Even the lawyer's remuneration for defending this case has been included in the expenses of the Project. ii. It is an admitted fact that no oral or written agreement exits in the between plaintif fs and new investor i.e. defendant No.3 hence the so-called third party investment is a nullity and an attempt to unlawfully exclude the plaintif fs. Admitted fact is that a third party stranger entered without written approval from plaintif f. On this point the defendants have relied on an e-mail dated 06.3.2020 which is neither an agreement nor a contract which is a mandatory requirement of Clauses 8 and 9. iii. Admitted fact is that neither notice of breach of contract has ever been issued to plaintif f nor subject Agreement is terminated under Clause 21 for alleged non-payment. This shows affirmation under Section 39 as argued by the learned counsel for the Plaintif fs. iv. Admitted fact is that no monthly reports and statements given to producer i.e. plaintif f in violation of Clauses 12 and 13. v. For the first time it was disclosed during the arguments that third party i.e. defendant No 3 is infact sister of defendant No 1. This fact was never disclosed earlier and not even in counter-af fidavits. vi. The defendants were unable to show 20% reciprocal investment to be made by defendants Nos.1 and 2.
25. Besides, learned counsel for the plaintif fs has submitted that the primary argument of the defendants Nos. 1 and 2 has been that no injunction can be granted in the instant matter despite breaches by the defendants Nos. 1 and 2. He has submitted that in support they have relied on Section 21 read with Section 56 of the Specific Relief Act, 1877. However , the defendants Nos. 1 and 2 have completely ignored Rule 2 of Order XXXIX which is an independent provision where under injunction can be granted to prevent breach of a contract irrespective of the provisions of the Specific Relief Act, 1877. He has submitted that the defendants Nos. 1 and 2 have relied on Section 21(a), (b), (d) & (g) to contend that the subject Agreement cannot be specifically enforced. Consequently the defendants Nos. 1 and 2 argued that injunction cannot be granted in terms of Section 56(f). In this regard, he has submitted at the outset that despite of such provisions, this Court can enforce the negative covenants under Section 57 as it is clearly mentioned in Section 57 that such injunction can be granted despite Section 56(f). In response to Section 21(a) it is submitted that compensation in money is not an adequate remedy in the instant case as the plaintif fs good will is also at the stake as the plaintif fs, were earlier shown in the promotional material but have been excluded subsequently in breach of the agreement. In response to Section 21(b) it is submitted that the provisions of the agreement on which the plaintif fs have relied upon do not run into minute details but rather those provisions deal with the substantive rights of the plaintif fs. In response to Section 21(d) it is submitted that the agreement dated 11.06.2018 is not a revocable contract which is evident from Clause 21 of the Agreement. He has submitted that the parties cannot unilaterally terminate the contract withou t assigning reasons hence the agreement is not revocable. Rather Clause 21 provides additional protection against revocation of the agreement hence reliance on Section 21(d) is misconceived. Furthermore, Section 21(g) is also irrelevant as there is no continuous duty over a period of 3 years as the movie should have been comple ted within 12 months on which point the defendants Nos.1 and 2 have failed. Therefore, defendants Nos. 1 and 2 cannot rely on their own failure to seek refuge under Section 21(g). Additionally the defendants Nos. 1 and 2 have also attempted to rely upon various subsections of Section 56. In response to Section 56(i) the plaintif fs rely upon Rule 2 of Order XXXIX. The defendants have further relied upon Section 56(j), whereas the defendants Nos. 1 and 2 have failed to point out any conduct of the plaintif fs which would disentitle them from seeking relief from this Court. He has submitted that the plaintif fs have complied with their obligations whereas the issue of alleged delayed payment has been raised for the first time by the defendants after filing of this Suit. Furthermore, Section 57 protects the plaintif fs as the plaintif fs have performed their obligations and. are ready and willing to comply with any other obligations provided that the defendants Nos. 1 and 2 abide by their obligations.
26. I have given due consideration to the arguments advanced by the learned counsel for the parties and perused the material available on record. Admittedly , a production Framework Agreement (the agreement) was executed on 11.6.2018 between the plaintif fs and defendants Nos.1 and 2 to make and produce Urdu feature film "Ishrat Baji Made in China" (Project). Under the agreement, the plaintif fs had undertaken to carry out the role as 'Investor' whereas the defendants Nos.1 and 2 had undertaken to carry out the role as a 'Producer'. Before proceeding further and in order to understand the dispute between the parties, it is neces sary to reproduce the relevant clauses of the agreement, which read as under:- "5. The Motion Picture/Film/Project shall be completed within 12 months, commencing from the effective date. The said production schedule will be changed subject to mutual consent of the parties in writing.
6. Funds and investment arrangement shall be as per the following arrangement:
(i) An estimated budget is prepared for the production of motion Picture/Film/Proj ect with the mutual contribution and consent of the parties. The Motion Picture/Film/Project shall be produced on the basis of estimated budget;
(ii) The Estimated budget may vary due to certain unforeseen Motion Picture/Film/Project expenses or otherwise;
(iii) The Proportion of respective investment of the Investor and Produce is 80:20:
(iv) The funds/Investment 'shall be disburs ed or made available by investor to Producer in parts/partially , as per the need and requirement of Motion Picture/ Film/Project;
(v) The said ratio of investment shall be increased or decreased according to the requirement of the Motion Picture/Film/Project or otherwise with mutual consent of Parties in writing;
(vi) ..............................
(vii) .............................
(viii) The investment/funds shall be comprised of money only and shall be disbursed through cash or cheque;
(ix) The commitment and timely provision and availability of funds by the Investor as detailed in approved budget shall be the essence of this Agreement. The payment plan and schedule as provided in the approved budget must be followed.
(x) ............................
7. Profit and loss sharing shall be as per the following arrangement:
(i) The Investor shall invest an amount of PKR.60,000,000/- (Rupees sixty million only) which shall be disbursed as per the disbursed schedule attached herewith. The Investor shall not invest more than the said amount;
(ii) The profit shall be shared as per 75:25 ratio between the parties (Investor : producer); ;
(iii) The loss shall be shred as per the respective investment share of parties;
(iv) The Net profit, as defined in schedul e shall be calculated and onward distributed between the Producer and investor as per the following arrangement:
(a) Investment shall be recouped first;
(b) After recouping the investment amoun t, the net profit, as per its arrival, shall be distributed as per investment amount basis between the producer and Investor;
(v) The Producer and Investor shall also share loss, if any , as per their respective share of investments;
8. If further financing or investment is required, the Parties with the mutual consent will decide to invest further or borrow from any bank or financial institutions or from such other person or parties at such rates in the best interest of project. However , in case of third party investment, the Producer's profit sharing ratio shall not be changed and affected in any manner ,
9. Terms and condition for acquiring Funds/Investment by third parties or investors, if any, shall be set out or provided separately , and a separate agreement shall be executed for the said purpose;
10. ...............................
11. ..............................
12. The Producer shall submit business report on monthly basis as per approved format i.e. repost are client wise billing reports, collection reports, account receivable and aging report. All such reports must incorporate revenues booked, recovery and aging of outstanding amount.
13. The producer shall also to submit financial statement on monthly basis to the Investor; 14 ........
15 .......
16 .......
17 ......
18 ......
19 ......
20 ......
21. The parties shall have a right to terminate this Agreement with fifteen (15) days written notice to other , if at any time or times during the term of this Agreement, any party:
(i) Commit any breach of any of the material terms and conditions of this Agreement and fails to rectify such breach within fourteen (14) days of receiving written notice of such breach from the other party; or
(ii) If the Motion Picture/Film/Project production has not been start as per the production schedule;
(iii) If any payment/investment shall not be received to the Producer within three calendar days of the payment due dates) and if such default is not cured within seven (7) business days after Investor's receipt of the respective Producer request;
(iv) Becomes insolvent or bankrupt; Schedule I Responsibilities and Duties Details
1. Producer Responsibilities: i) To provide its share of investment as per agreed schedule; ii) To supervise and manage all production base creative and financial activities; iii) To provide Finance management; iv) To complete Motion Picture/Production within its time limits; v) All other related services with the Production;
2. Investor Responsibilities: i) To provide timely funds/investments as per agreed schedule of Production management; ii) Grant suggestions whenever requested by Producer; Schedule 2 Payment Mechanism A. Disbursement Arrangement:
1. The Investor shall invest an amount of Rs.60,000,000/- (Rupees sixty Million only) only and shall not invest more than of the said amount.
2. The said amount shall be released by Investor to Producer as per the following arrangement: i) Rs.12,500,000/- upon execution of this Agreement; ii) Rs.17,500,000/- September 2018 iii) Rs.15,000,000/- November 2018 iv) Rs.15,000,000/- January-20 19.
B. Revenue: The revenue will be defined as; Revenue = worldwide box of fice revenue + net sponsorship + TV/television medium revenue."
27. The myth of the arguments of the learned counsel for the plaintif fs is that the plaintif fs had initiated payments in accordance with the agreement, and till date have paid a total sum of Rs.38,380,561/-. All payments have been released as per Clause 6(iv) of the agreement. The defendants Nos.1 and 2 have never alleged any breach on the ground of "late payment" or non-payment . Admittedly not a single notice of breach was ever issued to the plaintif fs on this ground or any other ground till date. The plea of the defendants Nos. 1 and 2 of delayed payment in their counter-af fidavit is nothing but a mere afterthought. It is also an admitted fact that the defendants Nos. 1 and 2 have not disbursed the reciprocal 20% investment to be made by them. Further , the case of the plaintif fs is that there is no oral or written agreement between the plaintif fs and new investor henc e the third party investment is a nullity and an attempt to unlawfully exclude the plaintif fs as no written permission/consent was obtained by the defendants Nos.1 and 2 from the plaintif fs to include the defendant No.3 in the said project, which is a mandatory requirement of Clauses 8 and 9 of the agreement.
Till this date the plaintif fs had never been provided with the financial statements and business reports as required under the agreement, and thus the plaintif fs were entitled to withhold any further payments until proper accounts were made available which in any case are to be disbursed as per need and requirement of the project.
28. On the contrary , counsel for the defendants Nos.1 and 2 has argued that the plaintif fs failed to fulfill their obligations and never released any payment in accordance with the arrangement provided in Schedule 2 of the agreement. He argued that even the first installment was not paid by plaintif fs in accordance with the mechanism provided in Schedule 2 of the agreement. Their further case is that even otherwi se the plaintif fs failed to pay an amount of more than Rs.25,000,000/- out of the agreed amount, as such, completion of project was delayed due to: the defaults made by the plaintif fs and as a consequence thereof the cost of the project exorbitantly increased.
The expenditure in respect of the project also increased as the team involved therein was unfortunately stranded in Thailand due to the outbreak of Covid-19 coronavirus, but the plaintif fs taken no pain for stuck the team of the project there. A representative of the defendants Nos.1 and 2 through an email dated 15.2.2019 informed the plaintif fs about the default in making payment, so also requested to fulfill their obligations by payment the balance amount. The said email was responded by the plaintif fs after a lapse of one year. Therefore, in the exigencies of the given circumstances; defendants Nos.1 and 2 were constrained to seek other investment opportunities for completion of the project. The involvement of the third-party investor i.e. defendant No.3 was well acknowledged by the plaintif fs in their email dated 06.3.2020 which has already been reproduced in the preceding paragraph.
However , the details of payment made by the plaintif fs to the defendants are mentioned below:- Payment Mechanism as per AgreementProposed Dates as per AgreementActual Amount Paid Date of Payment Rs.12,500,000/- Payable upon execution of Agreement i.e. 1 1-6- 2018Rs.12,500,000/- 30-7-2018 Rs.17,500,000/- September , 2018 Rs.5,600,000/- 28-12-2018 Rs.15,000,000/- November , 2018 Rs.2,500,000/- 15-1-2019 Rs.15,000,000/- January , 2019 Rs.2,222,222/- 18-1-2019 Rs.4,430,000/- 22-1-2019 Rs.786,786/- 4-2-2019 Rs.1,999,999/- 6-2-2019 Rs.2,000,000/- Rs.823,500/- --- Rs.356,250/- --- Rs.1,000,000/- 14-2-2019 Rs.4,400,000/- 15-3-2019
29. Considerably since last referred e-ma il i.e. 15.02-2019 there was a complete silence on the part of the plaintif fs rather , they disappeared and not even bother to contract the defendants until 23-02-2020 though it is claimed by the plaintif fs that the original agreement dated 11.06.2018 stood intact by email dated 16.3.2020. A cursory glance of the agreement between the parties shows that Clause 8 of the agreement relates to provision of additional investment with mutual consent of investor and producer whereas Clause 9 clearly provides that the terms and conditions of acquiring funds / investments by third parties or investors, if any shall be set out or provided separately and a separate agreement shall be executed for the said purposes. Moreover , agreement also provides termination Clause 21 that either party shall have a right to terminate this agreement with fifteen days (15) days written notice to other , if at any time or times during the terms of this agreement provided that if any payment/investment shall not be received to the Producer within three calendar days of the payment due date(s) and if such default is not cured within seven (7) business days after Investor's receipt of the respective request of the Producer . In the instant case the Investor/plaintif fs disappeared for nearly almost a lapse of one year, so also despite knowledge that the team of the Project stuck up abroad, the plaintif fs have failed to show any courtesy to look after them or even sent a twit for their team to return safely . It is a fact that no written notice for breach of contract was ever issued to the plaintif fs by the defendants. Defendants Nos.1 and 2 have also failed to place on record any paper/agreement with the new investor . The condition for further financing or investment is expressly mentioned in Clause (8) of the agreement which provides with the mutual consent of the parties which is lacking in the instant case. Neither the plaintif fs fulfilled their part of agreement by providing finance timely nor the defendants Nos.1 and 2 perform their obligations as ordained in the agreement.
30. The relief by way of an injunction whether temporary or permanent is in the discretion of the Court. Under section 21 of the Specific Relief Act, it is clearly mentioned that a contract cannot be specifically enforced which in its nature is revocable and or a contract for non-performance of which compensation of money is an adequate relief. Similarly , Section 56 of the Specific Relief Act clearly provides that an injunction cannot be granted to prevent breach of a contract, the performance of which would not be specifically enforced. Therefore, the plaintif fs have no lawful justification to force the defendants for a reluctant relationship.
31. Most of the rulings cited by the learned counsel for the parties, mention of which has been made in the preceding paragraphs describe generally the law relating grant or to refuse of an injunction application and a detailed discussion of the same is not necessary . Moreover , the case-law cited by the learned counsel for the parties are distinguishable from the facts and circumstances involved in the instant case as every case has its own significance.
32. Having regard to all the facts and circumstances of the case the applications are disposed of in the manner that the defendants Nos.1 and 2 shall furnish solvent surety equivalent to the amount claimed by the plaintif fs in the sum of Rs.38,380,561/- (Rupees Three Crore Eighty Three Lacs Eighty Thousand Five Hundred Sixty One Only) with the Nazir of this Court, who will invest the same in some profit bearing govern ment schemes till further orders.
Subject to furnishing surety as stated above, the interim order passed on 27.08.2020 stands recalled/vacated. The defendants are at liberty to release the film 'Ishrat Baji Made in China' as per their own wishes. The defendants are directed to audit the accounts, finances and expenses in respect of the Project namely "Ishrat Baji Made in China" from a renowned Chartered Accountant and submit report to this Court. They are further directed to submit fortnightly statement of revenue generated from the Project as mentioned in Clause B of Schedule II of the agreement dated 11.06.2018. However , the disbursement/entitlement of profit's ratio of the parties earn from the Project will be determined at the time of passing of final judgment after recording of evidence of the parties. It is made clear that the profit accrued on the invested amount by the Nazir shall also be included in the profit of the Project. In the facts and circumstances discussed above this appears to be a just and fair arrangement for the time being. Doubtlessly the Court has ample power to mould relief according to the facts and circumstances of the case.
To fortify this view reference can be made to the case of Amina Begum v . Ghulam Dastgir ( PLD 1978 SC 220 ).
33. Before parting it is needless to stress that the observations mentioned above are of tentative in nature.