Case Note & Summary
The Plaintiff, Stoughton Street Tech Labs Pvt. Ltd., operates LOCO, an online live streaming and e-sports gaming platform. It entered into a Collaboration Agreement dated 15.12.2021 with Defendant No.1 (Godlike Esports Pvt. Ltd.) and Defendant No.2 (Cornerstone Sport LLP), and a Tripartite Agreement dated 15.12.2021 with Defendant No.1 and Defendant No.3 (Jonathan Amaral, a popular e-sports gamer). The agreements contained negative covenants restricting the Defendants from associating with competing platforms and from disclosing confidential information. Defendant No.1 terminated the agreements by letter dated 13.05.2022, contending that no concluded agreement existed. The Plaintiff filed a suit seeking enforcement of the agreements and an interim application for injunction. The Court considered whether a prima facie case existed for enforcement of negative covenants. It found that the agreements were valid and binding, and that the Plaintiff had made out a strong prima facie case. The Court held that the balance of convenience was in favor of granting the injunction, as the Plaintiff would suffer irreparable harm if the Defendants were allowed to associate with competing platforms or disclose confidential information. The Court granted an interim injunction restraining the Defendants from acting contrary to the negative covenants until the disposal of the suit.
Headnote
A) Contract Law - Negative Covenants - Interim Injunction - Specific Relief Act, 1963, Section 38 - Enforcement of negative covenants in a collaboration agreement - Plaintiff sought to restrain Defendants from associating with competing platforms and disclosing confidential information - Court held that a prima facie case exists for enforcement of negative covenants and balance of convenience favors grant of injunction - Held that negative covenants are enforceable by injunction pending trial (Paras 1-56).
Issue of Consideration
Whether the Plaintiff is entitled to an interim injunction enforcing negative covenants in the Collaboration Agreement, restraining the Defendants from associating with competing platforms and disclosing confidential information.
Final Decision
The Court allowed the Interim Application and granted an interim injunction restraining the Defendants from acting contrary to the negative covenants in the Collaboration Agreement, including associating with competing platforms and disclosing confidential information, until the disposal of the suit.
Law Points
- Negative covenants
- interim injunction
- breach of contract
- confidentiality
- non-compete
- collaboration agreement
- e-sports
- streaming platform
Case Details
2022 LawText (BOM) (12) 96
Interim Application (L) No. 16493 of 2022 in Commercial Suit (L) No. 16491 of 2022
Mr. Mustafa Doctor, Senior Advocate a/w Ashish Kamat, Nishant Sing and Nikhil Bhat for the Plaintiff; Mr. Atul Rajadhyaksha, Senior Advocate a/w Akhilelsh Dubey, Vagish Mishra, Amit Dubey, Uttam Dubey, Rajuram Kuleriya, Varad Dubey, Ritika Gupta and Ritesh Yadav i/b Law Counsellors for Defendant No.1; Ms. Mahalakshmi G., a/w Savani Vaze for Defendant No.2; Mr. Kevic Setalwad, Senior Advocate a/w Awais Ahmedji, Parag Joshi and Dharmesh Joshi i/b T.D. Joshi and Associates for Defendant No.3
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Nature of Litigation
Commercial suit seeking enforcement of negative covenants in a collaboration agreement and tripartite agreement, with interim application for injunction.
Remedy Sought
Plaintiff seeks interim injunction restraining Defendants from associating with competing platforms and disclosing confidential information, and enforcement of the agreements.
Filing Reason
Defendant No.1 terminated the Collaboration Agreement and Tripartite Agreement, and Plaintiff alleges breach of negative covenants.
Issues
Whether the Plaintiff is entitled to an interim injunction enforcing negative covenants in the Collaboration Agreement.
Whether the agreements were validly terminated by Defendant No.1.
Submissions/Arguments
Plaintiff argued that the agreements are valid and binding, and Defendants are in breach of negative covenants by associating with competing platforms and disclosing confidential information.
Defendant No.1 contended that no concluded agreement existed and termination was valid.
Ratio Decidendi
Negative covenants in a contract can be enforced by interim injunction if a prima facie case is made out, balance of convenience favors the plaintiff, and irreparable harm would result. The existence of a valid agreement and breach of negative covenants justifies such relief.
Judgment Excerpts
By the present Interim Application the Plaintiff has inter alia sought relief in terms of the negative covenants contained in the Collaboration Agreement dated 15.12.2021...
The Plaintiff’s contention in the Suit is that Defendant No.1 has wrongly terminated the Collaboration Agreement as well as Tripartite Agreement by its termination letter dated 13.05.2022.
Procedural History
Plaintiff filed Commercial Suit (L) No. 16491 of 2022 and Interim Application (L) No. 16493 of 2022 seeking interim injunction. The application was reserved on 19th October 2022 and pronounced on 6th December 2022.
Acts & Sections
- Specific Relief Act, 1963: Section 38
