Punjab and Haryana High Court: In a revision petition filed against the order dated 29-08-2023, passed by the Additional District Judge, SAS Nagar (‘the Appellate Court’), Gurbir Singh, J., stated that in the present case, the respondent sent the notice to the petitioners rescinding the Agreement dated 25-09-2019 (‘the agreement’) on the ground that it was result of misrepresentation and fraud. Petitioners neither took any step nor gave any notice to the respondent for performing her part of the contract. The silence of petitioners, prima facie established that they took the agreement to have been rescinded, as conveyed by the respondent.
The Court stated that in the present case, prima facie, the terms of the agreement in question were unfair and the same was result of one party having superior bargaining power and the other party at a very inferior position with low bargaining power. So, the agreement could not be prima facie considered to be valid and binding to the respondent. Thus, the Court dismissed the present review petition.
Background
Shehnaz Kaur/ Shehnaz Gill-the respondent was a renowned and well-respected Indian film actor, singer and model. Petitioner 1 was the proprietor of Petitioner 2 i.e. ‘Simran Music Industries’, which operated as ‘Single Track Studios’ with YouTube username ‘hawkrecords’. The respondent sang and performed in numerous songs and music videos including one song titled ‘Vehem’, which was recorded by the respondent for the petitioners in 2019.
In 2019, respondent was invited as a participant in a reality TV show ‘Big Boss Season 13’, which was premiered on national television on 01-10-2019. Just two days prior to entering the Big Boss House, the petitioners approached the respondent requesting and pleading her to sign a quick “Memorandum of Understanding” regarding a show of intent with respect to their future working relationship. Respondent contended that it was conveyed to her that it was regarding ‘Vehem’ song and could always be modified, if need be. On repeated requests by the petitioners, the respondent signed the same in hurry and left for Big Boss House.
After the said show was over, the respondent started getting many offers. However, she came to know that petitioners were sending e-mails to third parties claiming that the respondent was their exclusive artist as per the agreement and was not allowed to appear in any other music video without the permission of petitioners. When the respondent approached the petitioners and demanded a copy of the agreement, they refused to share the same.
Further, the respondent sent the final legal notice dated 25-12-2020, submitting that the agreement was result of misrepresentation and was absolutely void and unenforceable. The respondent stated that it was a commercial contract extendable in perpetuity which amounted to an unfair negative covenant placing an unjust restraint on her right to freedom of trade and profession and was opposed to public policy. It was also communicated to the petitioners that she had rescinded the agreement and was, in no way, bound by the same.
Thereafter, for a period of more than two years, the respondent did not receive any further communication or objections from the petitioners, either directly or via correspondence with the third parties. Thus, the matter was deemed finally settled and the respondent successfully completed many projects over the two years including songs, advertisements, music videos, reality shows, movies etc., without any direct or indirect interference from the petitioners.
On 15-02-2023, the respondent was shocked to learn that the petitioners, after maintaining silence for more than two years, suddenly raised an ownership conflict through their YouTube channel on the respondent’s latest music video due to which YouTube suspended the revenue inflow to the producers of the song, as per their protocol. So, the producers were deprived of all the revenue from YouTube despite the video having reached 24 million views. The respondent contended that this act of the petitioners was negatively impacting the respondent and causing irreparable harm to her career and reputation.
Thus, the respondent filed the suit for declaration that the agreement was void and unenforceable. The respondent also sought permanent injunction restraining the petitioners or their agents from raising any ownership claims/conflicts over the works, performances or other related projects/ activities, authored/performed by the respondent solely or jointly. Further, the respondent also sought permanent injunction restraining the petitioners or their agents from defaming the respondent and contacting third parties or threatening them with legal action, if they proceed to sign/work with the respondent.
The Trial Court has dismissed the application filed by the respondent for temporary injunction, on the ground that no finding could be given with respect to the agreement, that the same was result of misrepresentation, without consideration or against public policy. The respondent was already working on different projects. So, no prima facie case was made out in favour of the respondent. However, the Appellate Court allowed the appeal and held that the prima facie case existed in the respondent’s favour and application for temporary injunction was allowed.
Analysis, Law, and Decision
The Court stated that it was established principle of law that negative covenants, operative during the period of employment when the employee was bound to serve the employer exclusively, were not to be regarded as restraint of trade, and therefore, did not fall under Section 27 of the Contract Act, 1872. Further, it was also well established that the freedom of contract must be founded upon equality and bargaining power between the contracting parties. The party having less bargaining power was left with little or no choice but to accept the unfair and unreasonable terms imposed upon it by the party with superior bargaining power.
The Court observed that in the present case, the respondent sent the notice to the petitioners rescinding the contract on the ground that it was result of misrepresentation and fraud. The petitioners did not reply to the said notice. As per terms of the agreement, the petitioners were to make four official audios and videos of the respondent in each year. Petitioners neither took any step nor gave any notice to the respondent for performing her part of the contract. Petitioners did not directly and indirectly interfere in the working of the respondent for the said period and allowed her to work independently. The silence of petitioners, prima facie established that they took the agreement to have been rescinded, as conveyed by the respondent.
The Court stated that in the present case, prima facie, the terms of the agreement in question were unfair and the same was result of one party having superior bargaining power and the other party at a very inferior position with low bargaining power. So, the agreement could not be prima facie considered to be valid and binding to the respondent. The Court stated that petitioners did not interfere the working of the respondent for a long period of two years after receiving legal notice from her. Balance of convenience was also in favour of the respondent. If the respondent was estopped from working, except for the petitioners, based on unfair agreement, the respondent would suffer irreparable loss and injury. Thus, the Court dismissed the present review petition.
[Sajjan Kumar Duhan v. Shehnaz Kaur, 2024 SCC OnLine P&H 6998, decided on 01-07-2024]
Advocates who appeared in this case :
For the Petitioners: Dr. Anmol Rattan Sidhu, Senior Advocate with Harlove Singh Rajput, Advocate and Jashandeep Singh Bains, Advocate.
For the Respondent: Fury Jain, Advocate and Taranjeet Singh Dosanjh, Advocate.
