The counsel seeks permission to address the bench collectively as your lordships?

Much
obliged.

Warm greetings to your lordships, if it may please this Honourable Court, this is the counsel
of the Respondent appearing before this Hon’ble Court in the matter of Promixa Entertaining
Times Pvt Ltd v Reaper Emerging Stays Pvt. Ltd. regarding the temporary suspension of
contractual obligations and other issues. We appear before this Hon’ble Court under Section
6 of the Commercial Courts Act, 2015. The Commercial Court shall have jurisdiction to try
all suits and applications relating to a commercial dispute of a Specified Value arising out of
the entire territory of the State over which it has been vested territorial jurisdiction.
Explanation.––For the purposes of this section, a commercial dispute shall be considered to
arise out of the entire territory of the State over which a Commercial Court has been vested
jurisdiction, if the suit or application relating to such commercial dispute has been instituted
as per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908 (5 of 1908).

Your Lordships, I shall be taking 10 minutes of the Court’s time out of which the counsel
reserves 1 minute for rebuttals. I shall be first considering issue 1- regarding the whether we
could have temporarily suspended our contractual obligations under the MSA; and issue 2
regarding whether the Applicant was in the breach of MSA for having executed an agreement
with All Living Things Pvt. Ltd.

If your Lordships are well versed with the facts of the case, the counsel for the Respondent
seeks permission to proceed with the issues and the arguments?

Under the 1st issue, I shall establish that the temporary suspension of MSA is allowed.

First of all Your Lordships, in Page No. 4, Paragraph 6, it has been mentioned that due to the
onset of the pandemic, the Disaster Management Act, 2005 was invoked for the first time.
Section 72 of the Disaster Management Act, your Lordships, states that the provisions of this
Act, shall have effect, notwithstanding anything inconsistent therewith contained in any other
law for the time being in force or in any instrument having effect by virtue of any law other
than this Act. This means that this Act has overriding effect and anything that is inconsistent
with this Act will not be enforceable under law. In the present case, the performance of
contractual obligations under the MSA required us to generate revenue by running the hotel
PPP which is in direct contravention with the act and hence, the same cannot be enforced till
the time the act is in force.
Your Lordships, the circumstances that restricted us from fulfilling our obligations under the
MSA qualify as Force Majeure events. The Government of India and Ministry of Finance,
through an Office Memorandum and the Ministry of New and Renewable Energy through a
notice stated that COVID-19 would be treated as a Force Majeure event.

Au authority that we can also rely on is the case of Standard Retail Pvt. Ltd. v. M/s. Global
Corp. & Ors., where the High Court of Delhi specifically held that COVID-19 is a Force
Majeure event.

Moreover, subsequently when the applicant entered into a contract with ALT, it agreed to
receive 10% of the hotel revenue from ALT during the contract and it justified the same by
stating that COVID-19 had given rise to a difficult economic scenario along with permanent
changes in customer preferences. This means that the applicant acknowledged the fact that
the pandemic had resulted in several economic hardships and the previous revenue sharing
model was not feasible during the lockdown.

Hence, taking all these factors into account, we humbly submit that we should be allowed to
temporarily suspend our contractual obligations.

Additionally, your Lordships, we submit that the applicant is not entitled to damages since
Clause 5 of the MSA can be invoked only after there is termination of contract. In the present
case, there is no termination in the first place. Moreover, in Egon Zhender International Pvt.
Ltd. v. Namgayal Institute for Research on Ladakhi Art and Culture, (Delhi HC, 2013, Para
21) A lease deed had been executed in 2001, which was registered for three years — Lease deed
could be “renewed” at the “option” of the lessee at an enhanced rate of 12% over the last paid
rent and security deposit was to be “increased by 12% on each renewal — Petitioner was required
to give notice of its intention. For second tenure lease was executed but not registered — It was not

an extension of the earlier lease deed the court laid down that the provisions of liquidated
damages are not different from that of non-liquidated damages, which means that to claim
either of them, breach and the damage suffered by the party must be proven. In the present
case, the applicant has not suffered any losses since it subsequently entered into another
contract with ALT.

Your Lordships, this concludes our submissions for the 1 st issue. If the court has no further
questions, the counsel seeks the permission to proceed with making submissions for the 2 nd
issue.

Much obliged, your Lordships.

For the 2nd issue, Your Lordships, I shall be making my submissions under 3 limbs.

Under the 1st limb, your Lordships, we submit that the applicant entered into the contract and
chose to be bound by the Clause 6 by its own free will, its own free consent. We can establish
this by taking help of Section 14 of Indian Contracts Act that says that consent is said to be
free when it is not caused by coercion, under influence, fraud or misrepresentation. Section
13 of the Indian Contract Act, two or more persons are said to consent when they agree upon
the same thing in the same sense. In the instant case, keeping in mind the circumstances that
led to the formation of the contract, both the parties were on an equal footing, in no way were
we in a position where we could have influenced them and clearly there was no coercion,
fraud or misrepresentation. Hence, your Lordships, we submit that the applicant entered into
and agreed to uphold the non-compete clause by its own free will. Non-compete clauses are
clauses in a contract under which one party agrees not to enter into or start a similar
profession or trade in competition against another party.

If I may move on to the next limb of our submissions with the due permission of our
Lordships?

Secondly, your Lordships, we submit that Clause 6 of the MSA does not violate the
applicant’s right to trade. To establish the same, your Lordships if you could kindly refer to
page 23 of our written submissions, you can see that we have relied on the case Niranjan
Shankar Golikari v. The Century Spinning and Mfg. Co. Ltd., the Supreme Court gave a
liberal interpretation of Section 27 by stating that not all non-compete clauses effective after
the termination of a contract are prima facie prohibited because the enforceability of such
clauses varies from case to case and if the intended benefit is not simply unilateral or the
clause is not mischievously framed, then the same can be put into force. This means that in
order to qualify for being enforceable by law, it is important to ensure that restrictions
imposed post termination are reasonable and not harsh. So your Lordships, we can see that in
the present case, Clause 6 is not excessively harsh or unreasonable in any manner. Hence, we
humbly submit that Clause 6 is enforceable.

(in general sense, reasonable means what an ordinarily prudent person would do, sometimes
also when the law does elaborate reasonableness, it often suggests statistical considerations.
However, in this case, it means not excessively harsh.)
Under the last limb, your Lordships, we submit that the Applicant itself has not come to the
court with clean hands. Even when there was an existing contract that neither party had
terminated, the applicant chose to go ahead and enter into another contract with ALT Pvt.
Ltd. and hence, in turn, it violated Clause 6. Accordingly, your Lordships, we submit that we
should get the MGR amount for the remaining Lock-in period.

Your Lordships, this concludes our submissions for the 2 nd issue. May the counsel proceed
with the prayer?

PRAYER BEGINS

In light of facts presented, questions raised, arguments advanced and authorities cited,
Counsel for the Respondent most humbly prays before this Hon’ble Court, to adjudge and
declare:

(1.)That, RES could have temporarily suspended its obligations under the MSA during
the period and hence PET is not entitled to the MGR amount for the remaining Lock-
in period even after 31 March 2021.
(2.)That, PET was in breach of the MSA for having executed the agreement with ALT
w.e.f. 31 March 2021. Further, RES is entitled to an amount equivalent to the MGR
for the remaining Lock-in period from PET.

The Court being satisfied may in like manner make any such demand as it may regard fit in
the light of Justice, Equity and Good Conscience.

And for this demonstration of kindness the Respondent might as compelled bound ever
humble pray.

If the court has no further questions and if I may of no further assistance to the court, I rest
our submissions here. Therefore the submissions do not stand.