@JUDGMENTTAG-ORDER
S. Muralidhar, J.@mdashIA No. 7849/2009 by the plaintiff Western International University Inc. (''WIU'') under Order XXXIX 39 Rules 1 and 2 of the CPC 1908 (CPC) is an application seeking an interim injunction restraining the Respondents/Defendants from representing to the public at large and the students in particular that Defendant No. 1 Modi Apollo International Group Pvt. Ltd. (''MAIGPL'') is offering the plaintiff WIU''s programs and courses of study and/or accepting or fee for enrolment in respect of such programs and/or courses and from taking out or continuing to maintain any advertisement with respect to the above in any newspaper or other print/electronic media or by way of any hoardings/billboards using plaintiff''s trade name/trade mark and other intellectual property.
2. The plaintiff WIU is an Arizona Corporation having its principal place of business at Phoenix, Arizona. It is a private university in the United States of America (''USA'') accredited by the Higher Learning Commission (''HLC'') of the North Central Association of Colleges and Schools (''NCACS''), Illinois. It is accredited to offer courses and programmes leading to certificates, bachelor degrees in arts and sciences and professional curricula and master degrees (professional curricula) and associate degrees. According to the plaintiff WIU it is a wholly owned subsidiary of Apollo Group Inc. (''AG''), an Arizona Corporation having its principal place of business at the same address as WIU.
3. AG entered into a Master Agreement with Apollo International Inc. (''Al''), Defendant No. 2 herein, on 15th October 1999 whereby AG granted to AI the non-exclusive right to use the word ''Apollo'' as part of its trade name and business during the term of Master Agreement. Inter alia, AI was to enable AG to establish campuses, learning centers, distance education programmes, training programmes and other educational offerings of AG and its subsidiaries outside of the United States, Canada and Puerto Rico through its subsidiaries and to provide faculty, personnel and curriculum for each such location. It was mentioned in the said agreement that the educational programmes offered would include that of the University of Phoenix (''UOP'') another wholly owned subsidiary of AG. Clause 2 indicated that the parties would form and use subsidiaries to achieve the objectives of the Master Agreement. This agreement also contained an arbitration clause.
4. It is stated that pursuant to the said Master Agreement, AI approached WIU to offer WIU''s educational courses/programmes at the campuses of AI and its subsidiaries and joint ventures in India through regular class room instruction. On 30th August 2001 AI entered into a Shareholder''s Agreement (''SHA'') with K.K. Modi Investment and Financial Services Pvt. Ltd. (hereafter ''Modi'' or ''MIFSPL''), a company forming part of the Modi Group, to conduct the business of higher education services in India. Inter alia, the SHA provided for the formation of a new entity to be registered under the Companies Act, 1956 having its registered office in New Delhi. Under the agreement MIFSPL was to create a special purpose vehicle (''SPV'') for making investments into the new company i.e. MAIGPL. MAIGPL was to have flexibility to raise funds from other investors including but not limited to an initial public offer (''IPO'') subject to Modi retaining the control of the SPV. Among other clauses were those specifying the respective responsibilities of AI on the one hand and Modi on the other. Among AI''s responsibilities under Article 5.1 were the following:
(f) primary supervision and implementation responsibility for negotiating the necessary changes that may be demanded by the Higher Learning Commission, NCA-the body that accredits Western International University (''WIU'')-in order to make possible the establishment of WIU campuses and programs in India. In addition, Apollo will provide to the Company (i) the educational expertise in curriculum development of Apollo based on and adapted from the University of Phoenix, WIU and/or Apollo''s subsidiaries in order to develop new courses, degree programs, and certificates, and to maintain current all established courses and degree and non-degree programs and (ii) mutually agreed upon degree and non-degree programs and the administrative, technical, and marketing expertise and services of Apollo based on and adapted from those of the University of Phoenix, WIU and other Apollo Group, Inc. subsidiaries, under the conditions established in the relevant agreements to be negotiated between Apollo and the Apollo Group, Inc. and, to the extent necessary, between Apollo and the Company.
It is understood, however, that courses, curriculum and programs developed and/or used for the Indian market by the Company will not be disclosed, divulged or shared with any other entity or third party in India without the approval of the Board.
5. On its part Modi was to be responsible for complying with the statutory requirements of the regulatory bodies in India and supervise and implement the adaptation of programmes provided by AI to suit Indian conditions and environment. The duration of the agreement was specified in Article 10 which reads as follows:
10.1 Subject to earlier termination as set forth in Section 10.3 below, this Agreement shall be in force as of the date of its execution and shall remain valid and bind the Shareholders and their respective successors and assignees (i) for thirty (30) years and (ii) for so long as both Shareholders, including its Affiliates, each hold at least a forty percent (40%) equity interest in the Company.
10.2 At the end of the term set forth in Section 10.1, this Agreement shall be deemed automatically extended for an additional ten (10) years, unless any of the Shareholders manifests its intention not to have it extended, through a written notice sent to the other Shareholder at least six (6) months before the end of the term of thirty (30) years.
10.3 The Agreement may be terminated by the following:
(a) material breach of any of the material provisions hereof by any of the Shareholder; or
(b) bankruptcy or dissolution of any of the Shareholders or the Company; or
(c) by mutual consent of the Shareholders.
10.4 A written notice of termination shall be sent by a Shareholder to the other within thirty (30) days from the date of the event which may be a cause for termination stating the date of effective termination, which may not be less than thirty (30) days from the receipt of the notice of termination. In the event of termination due to a material breach of this Agreement, the breaching Shareholder shall be allowed thirty (30) days to cure such breach.
10.5 This Agreement shall be terminated upon the following:
(a) any Shareholder, including its Affiliates, reduces its equity interest in the Company below forty percent (40%), provided, however, that with respect to Section 6.12(b), this Agreement shall not terminate until such time as Apollo makes full payment to Modi for its shares of the Company, and with respect to Section 4.1, this Agreement shall not terminate until the election by Modi to Exchange pursuant to Section 4.1 and the effectiveness of an Apollo IPO.
6. Article 11.14 of the SHA contained an arbitration clause which read thus:
11.14 Arbitration of Disputes. The parties shall attempt to settle disputes arising out of or relating to this Agreement or the breach thereof by a meeting of a designated representative of each of the parties within ten (10) days after a request by either of the parties to the other party asking for the same. If such dispute cannot be settled at this meeting, the parties shall designate a mediator, or if the parties are unable to agree upon a mediator, each party shall choose a mediator and the chosen mediators shall choose a single person to mediate the dispute. If the matter is not then settled in a manner satisfactory to the parties, either party may submit the dispute to binding arbitration by a sole arbitrator chosen by agreement of the parties, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Except as otherwise specifically provided for herein, each party shall bear its own costs and attorneys. fees. The procedures specified herein shall be the sole and exclusive procedures for the resolution of disputes between the parties arising out of or relating to this Agreement; provided, however, that a party may seek a preliminary injunction or other preliminary judicial relief if in its judgment such action is necessary to avoid irreparable damages. All applicable statutes of limitations shall be tolled while the procedures specified in this Section are pending. The parties will take such action, if any, required to effectuate such tolling.
7. Two separate agreements were entered into between WIU and AI on 6th September 2002. These were the Implementation Agreement and the Licence Agreement. As far as the Implementation Agreement was concerned, it noted some of the clauses of the Master Agreement between AG and AI and provided that AI would have the non-exclusive right to use the names, trade marks and/or logos associated with WIU or Western International University as part of its WIU Branded Offerings during the term of the agreement. Clause 6 of the Implementation Agreement specified its term as 24 months subject to extension by mutual agreement for an additional 24 months provided that such extension was agreed to at least 6 months prior to the scheduled expiration of the agreement. Importantly, the consequences upon termination of the Implementation Agreement were spelt out as under:
Upon termination of this Agreement, the following conditions apply:
(a) WIU and AI shall continue to satisfy their respective obligations under this Agreement until all students enrolled in the educational offerings, as detailed in Exhibit A, then in session are completed.
(b) Article 2 of this Agreement concerning the parties. financial responsibilities shall survive termination of this Agreement and shall remain the continuing obligations of the parties for all students who enroll prior to the termination date of this Agreement.
(c) Representatives of WIU and/or AI shall continue to have access to office space until all students enrolled in the educational offerings as detailed in Exhibit A prior to termination of this Agreement have completed their enrollment in the Programs or Courses of Study.
(d) WIU and/or AI shall be permitted to examine and make copies of student enrollment and financial records pertaining to the educational offerings as detailed in Exhibit A until all such students have completed their enrollment. All such student enrollment and financial records shall remain the sole property of WIU.
(e) WIU shall continue to maintain the official accounting and student books and records for the educational offerings as detailed in Exhibit A until all students enrolled in the relative programs and courses of study prior to termination of this Agreement have completed their enrollment.
8. As far as the Licence Agreement of the same date, i.e. 6th September 2002 was concerned it reiterated that WIU''s logos, trade names, trade marks, proprietary curricula and other intellectual property rights collectively referred to as WIU property were the sole and exclusive property of WIU and that during the term of the Licence Agreement WIU was granting to AI a non-exclusive licence to use WIU property for the purposes of promoting and marketing WIU programmes in India. The said Licence Agreement was terminable on 30 days notice in the event AI violated the agreement. Clause 5 stated that the Licence Agreement was co- terminus with the Implementation Agreement. It was stated that upon the termination or expiration of the Licence Agreement AI agreed to immediately cease the use of the WIU property.
9. An addendum dated 6th September 2002 to the SHA was executed by Modi, AI and MAIGPL. Clause 8 thereof mentioned the Implementation Agreement between WIU and AI and identified it as Exhibit A. The addendum stipulated as under:
It is understood by all parties to this Addendum that,
(a) An Implementation Agreement (Exhibit A) exists between Apollo and WIU related to the Shareholders Agreement. The term of this Implementation Agreement is twenty-four (24) months. The Implementation Agreement includes a provision of advance notice of 6 (six) months . At the termination of this Implementation Agreement Apollo and WIU can extend the termination date by mutual agreement.
(b) The Implementation Agreement specifies the obligations of Apollo Group, Inc. and Apollo, and therefore of MAIGPL, in case the Implementation Agreement is not extended (see Exhibit A). In particular, upon termination of this Implementation Agreement,
(1) Modi and Apollo shall continue to satisfy their respective obligations under the Shareholders Agreement and this Addendum hereto until all students enrolled as of the termination date have completed their educational program.
(2) Article 5 of this Addendum concerning the parties. financial responsibilities shall survive termination of the Implementation Agreement and shall remain the continuing obligation of MAIGPL, for all students who enroll prior to the termination date of the Implementation Agreement.
(3) Apollo shall continue to have access to office space until all students enrolled in the educational programs prior to termination of the Implementation Agreement have completed their enrollment.
(4) Apollo shall be permitted to examine and make copies of student enrollment and financial records pertaining to the educational offerings until all students who enrolled prior to the termination of the Implementation Agreement have completed their enrollment.
(5) MAIGPL shall continue to maintain the official accounting and student books and records until all students enrolled in the relevant programs and courses of study prior to termination of the Implementation Agreement have completed their enrollment.
In effect, therefore, the relevant clauses of the Implementation Agreement specifying the consequences flowing from its termination were incorporated into the SHA through the Addendum dated 6th September 2002 between AI, Modi and MAIGPL.
10. Consequent upon the aforementioned agreements a Royalty Agreement dated 31st January 2003 was entered into between Defendant No. 1 MAIGPL, and Defendant No. 2 AI. The recitals of this Royalty Agreement took note of an addendum dated 13th September 2002 to the SHA in terms of which MAIGPL agreed to make payment of royalty to Apollo in respect of the programmes and degrees offered by Apollo and its affiliates related to WIU in India through MAIGPL. Article 3.1 thereof provided that it would become effective from 13th September 2002 and would continue to be in full force and in effect for a period of 2 years subject to a successful negotiation by AI of the Implementation Agreement in 2004, 2006 and 2008. It was reiterated that upon expiration of the Royalty Agreement, AI and its associates would continue to satisfy their respective obligations under the Royalty Agreement ''until all students enrolled in the educational offerings then in session have completed the course as per the terms and conditions of the Implementation Agreement.''
11. According to WIU on 16th May 2005 the All India Council for Technical Education (''AICTE'') notified certain regulations relating to foreign universities. These sought inter alia to regulate the offerings of technical education by foreign universities through regular class rooms in India. According to WIU, MAIGPL and AI assured it that no registration with the AICTE was required. Nevertheless MAIGPL requested WIU to issue an authority letter in its favour authorising MAIGPL to represent WIU before the AICTE. WIU issued such a letter on 17th June 2005. WIU states that thereafter several show cause notices and letters were issued by AICTE in the name of WIU at the address of MAIGPL and replies were sent by MAIGPL on behalf of WIU. However WIU was surprised to notice that AICTE had in its website listed WIU as an unapproved foreign institution conducting technical education courses in India in violation of the AICTE regulations. WIU states that AI was not playing an active role vis-a-vis MAIGPL and WIU was becoming increasingly concerned with the actions of MAIGPL.
12. Consequently WIU issued a letter dated 27th September 2007 to AI communicating its intention not to renew the Implementation Agreement after its expiration on 30th September 2007. It also informed MAIGPL that in terms of Article 5 of the Licence Agreement, upon expiration of the Implementation Agreement the Licence Agreement would also terminate. WIU further stated that it was willing to extend the date of expiration of the Implementation Agreement for one month up to 31st October 2007 to allow the impacted stakeholders to discuss the various responsibilities of the parties towards the existing students of MAIGPL enrolled in WIU''s courses/programmes. By a letter dated 29th September 2007 MAIGPL requested WIU to reconsider its decision. A meeting was held between the parties on 4th October 2007 whereby MAIGPL persuaded WIU to extend the Implementation Agreement and Licence Agreement beyond 31st October 2007 on the condition that WIU would have the right to terminate the said agreement at any time by giving 30 days. notice. A letter to this effect was issued to WIU by AI on 25th October 2007 and AI signed the copy thereof signifying its acceptance of the terms.
13. According to WIU it was taken aback when it learnt that in response to AI''s letter dated 21st April 2008 MAIGPL represented to the AICTE that it was not conducting any technical programme but was only a facility provider. MAIGPL had further filed an affidavit with AICTE stating therein that it was merely a conduit between students in the higher studies and universities by various modes. WIU states that it was concerned about the attempt by MAIGPL to disown liability as an educational institution operating in India contrary to the understanding between AI and WIU. It was also concerned about the regulatory issues concerning AICTE.
14. Consequently on 22nd April 2009 WIU issued to AI a notice regarding non-renewal of the Implementation Agreement and Licence Agreement. In the said notice WIU requested AI to formally advise MAIGPL as well as Modi that they were not thereafter to offer enrollment to any student in any of WIU''s courses/programmes, or publish advertisements in newspapers or other print/electronic media for enrolment in the WIU''s programme and not to use WIU''s trade mark, logo and other intellectual property in any form or manner except as absolutely necessary in relation to the completion of the course/programmes for the existing students. In the said letter dated 22nd April 2009 WIU undertook that it would continue to satisfy its obligation towards existing students in the normal way and that those students of MAIGPL enrolled in WIU''s programme prior to 22nd May 2009 would be allowed to complete their respective courses/programmes. A separate letter was written by WIU to MAIGPL on 22nd April 2009 revoking the authority granted to MAIGPL to represent WIU before the AICTE. A copy of the said letter was also sent to AI. WIU also informed AICTE in writing of the revocation.
15. On 20th May 2009 Modi (MIFSPL) filed in this Court a petition u/s 9 of the Arbitration & Conciliation Act, 1996 (''ACA'') against AI, AG, WIU, UOP and MAIGPL. In the said petition it was claimed by Modi that there was economic unity between the Respondents to the said petition and therefore notwithstanding the fact that the two parties to the SHA dated 30th August 2001 were Modi and AI, such agreement would be equally binding on the other parties including WIU, AG and UOP. By an order dated 25th May 2009 a learned Single Judge of this Court dismissed the said petition as not maintainable. It was held that a contract between Modi and AI could not be considered to be a contract between Modi and the other Respondents who were separate legal entities. The argument that there was economic unity of AI and WIU, was specifically rejected. Aggrieved by the said order Modi filed FAO (OS) 245/2009 before the Division Bench of this Court. It is stated that while directing issue notice to issue in the appeal, the Division Bench directed the appeal to be listed for hearing on 21st July 2009.
16. When it found that despite the expiry of Implementation Agreement on 22nd May 2009, MAIGPL was continuing to offer enrolment in WIU''s courses, WIU on 3rd June 2009 filed the present suit against MAIGPL and AI seeking inter alia, a permanent injunction restraining MAIGPL and AI from representing to the public at large that they were offering WIU''s courses and accepting fees for enrolment in respect of such courses. Permanent injunction was also sought to restrain MAIGPL and AI and from advertising WIU''s courses and using its trade mark, trade name and logos thereby holding out that MAIGPL was still associated with WIU. Along with the suit WIU filed I.A. No. 7849 of 2009 under Order XXXIX Rules 1 and 2 CPC for an interim injunction. The suit and application were listed before the Vacation Court on 10th June 2009 and thereafter on 12th June 2009 when summons were directed to issue in the suit and notice in the application returnable on 10th August 2009.
17. Aggrieved by the denial of an interim order at that stage, WIU filed FAO (OS) 246/2009 which was disposed of by the Division Bench of this Court on 7th July 2009 permitting WIU to mention the case before this Court for an advancement of the date of hearing of its application for interim relief. Accordingly the case was listed before this Court on 8th July 2009. While permitting replies to be filed within four days this Court directed that any enrolment by MAIGPL of students in WIU''s courses would be subject to the orders of the Court. MAIGPL filed its reply to I.A. 7849 of 2009 and also filed I.A. No. 8725 of 2009 u/s 8 ACA. Arguments on both applications were heard finally on 16th and 17th July 2009.
18. The submissions of Mr. Rajiv Nayyar, learned Senior counsel appearing for the plaintiff and Mr. Rajiv Sawhney, learned Senior counsel appearing for the Defendant No. 1MAIGPL have been heard. It may be mentioned here that the report of service of notice upon Defendant No. 2 AI is awaited. None appeared for AI.
19. The submissions on behalf of the plaintiff are that the notice of termination dated 22nd April 2009 unambiguously stated that the effective date of termination of the Licence Agreement, and consequently the Implementation Agreement between WIU and AI, would be 22nd May 2009. As far as the WIU is concerned the addendum dated 6th September 2002 to the SHA incorporated the conditionality''s attaching to the Implementation Agreement and Licence Agreement between WIU and AI. Therefore notwithstanding the term of the SHA between Modi and AI being 30 years, the offering of WIU''s courses by MAIGPL was governed by the Addendum dated 6th September 2002 to the SHA. The addendum having been signed by MAIGPL was equally binding on it. In the circumstances, there was no justification for MAIGPL to continue to receive application forms from prospective applicants for WIU''s courses after 22nd May 2009. There was also no justification for MAIGPL to continue to use, after 22nd May 2009, WIU''s trade mark, trade name and logo or issue any advertisement using the trade mark and logo of WIU in the print and electronic media or by way of any hoarding, thereby holding out that MAIGPL was offering WIU courses in BBA/MBA. WIU has placed on record photographs of hoardings taken on 1st June 2009 bear out the above contention. Mr. Nayyar also placed on record photocopies of certain application forms of WIU, distributed by MAIGPL even after 22nd May 2009, and accepted from the prospective applicants on 2nd June 2009. It is submitted that although each of the prospective applicant was asked to pay a sum of Rs. 600/- for the application form, it was reliably learnt that MAIGPL was collecting fees in the range of Rs. 5 to 6 lakhs from each applicant. It is submitted that these activities of MAIGPL after 22nd May 2009 are illegal and contrary to the Addendum dated 6th September 2002 to the SHA. Mr. Nayyar reiterated that WIU stood by the commitment made by it in the notice dated 22nd April 2009 as regards students enrolled till 22nd May 2009 who would be allowed to complete their courses. Course material would be provided to such students by the WIU and degrees would also be awarded subject to their successful completion of the course.
20. Mr. Nayyar submits that the remedy for an alleged illegal termination of a contract can only be damages. He submits that MAIGPL cannot seek specific performance of the SHA, notwithstanding the addendum thereto dated 6th September 2002. It is pointed out that WIU was itself not a party to the SHA whereas MAIGPL was a party to the Addendum to the SHA whereby it bound itself to abide by the express terms and conditions of both the Implementation Agreement as well as Licence Agreement between WIU and AI. A reference is made to Sections 14(1) (b) (c) and (d) of the Specific Relief Act, 1963 to emphasise that no relief of specific performance could be granted to MAIGPL vis-�-vis the SHA and certainly not in a suit against it by the WIIU. Reliance is placed upon the decisions of this Court in
21. On behalf of MAIGPL it is contended by Mr. Sawhney, learned Senior counsel that WIU is a subsidiary of AG as much as UOP and AI. It is submitted that it is strange that WIU is seeking a relief against its own sister concern AI both of whom are part of the same group i.e. AG. It is pointed out that the employees of AG are also the employees of AI and both entities operate from the same address. The management of both is by the same persons. It is submitted that these are proceedings instituted by WIU are in collusion with AI to avoid any obligation under the SHA. It is contended that the SHA was entered into by AI as an agent of AG and its subsidiaries, i.e. WIU and UOP. The agency although not expressly stated in the IA, it is to be implied in terms of Section 187 of the Contract Act, 1872. It is further submitted that inasmuch as AG, AI, WIU and UOP operate under a singular command and control of AG, the separate juristic identities of the four companies is only a matter of internal arrangement of business. A reference is made to the representation made by AI to the HLC in the USA in April 2001 seeking a change in the Statement of Affiliation to include a provision to operate in India. It is pointed out that therein WIU stated that it would open its India campus ''through a partnership between WIU, Apollo International and the Modi Group.'' Therefore, it is contended, it would be wholly unfair to permit WIU to escape liability by contending that it is not a party to the SHA which is valid for 30 years and cannot be terminated except in the manner indicated therein. It is submitted that throughout Modi was led to believe that WIU was part of AG and accordingly huge monies were invested in the SPV (MAIGPL) by Modi. Apart from consequential financial loss that Modi would have to incur, the future of nearly a thousand students would be put in jeopardy if the termination of the IA and LA were to take effect.
22. Various clauses of the agreements in question have been referred to show that AI, WIU and UOP operate as a single economic unit and therefore the obligations of AI under the SHA, which includes the arbitration clause 11.14 are equally binding on WIU. It is pointed out that as part of the documents filed in the suit, WIU has included a draft of the SHA which could not have been possibly been with it unless it was part of the same group of which AG was part. It is submitted that the real reason for WIU abruptly terminating the Implementation and Licence Agreements with AI was that after Modi had invested several crores of rupees in the joint venture and developed a goodwill for WIU''s courses, AG through its agent AI wanted to wriggle out of its commitments under the SHA and derive the entire benefit of Modi''s efforts exclusively for itself and to the exclusion of Modi. It is submitted that the suit is not maintainable in the present form since the plaintiff is a guilty of suppression of material facts concerning the Master Agreement entered into between AI and AG and the SHA thereafter between AI and Modi. It is submitted that the suit is bad for non-joinder of parties since the necessary and proper parties i.e. AG, UOP and Modi have not been made parties to the present proceedings. It is pointed out that AI is yet to write to Modi or MAIGPL about the termination of the Implementation and Licence Agreements. No order should be passed in these proceedings in the absence of AI who is yet to be served. For all the above reasons it is submitted that no case has been made out for an ad interim injunction as prayed for.
23. It is submitted on behalf of MAIGPL that the order dated 25th May 2009 passed by the learned Single Judge dismissing Modi''s petition u/s 9 ACA is under challenge before the Division Bench. Since similar issues would arise for consideration in the said appeal, it is apprehended that any order passed by this Court in the present application for interim injunction might prejudice the outcome of the said appeal.
24. In the first place this Court wishes to deal with the application u/s 8 ACA based on the contention of MAIGPL that the suit is not maintainable in the present form particularly since there is an arbitration clause in the SHA. A similar contention raised in the petition u/s 9 ACA filed by Modi was rejected by a learned Single Judge of this Court by the judgment dated 25th May 2009. Although an appeal against the said judgment is stated to be pending, there is no interim order passed in the said appeal as of now. Therefore, this Court proceeds on the basis that the judgment dated 25th May 2009 still holds the field. It does appear prima facie that with WIU not being a party to the SHA, the arbitration Clause 11.4 thereof cannot be stated to be binding on WIU. Therefore this Court finds no merit in the application u/s 8 ACA. It is clarified that this is not intended to influence the outcome of the appeal filed by Modi against the judgment dated 25th May 2009 of the learned Single Judge.
25. Turning to the application by WIU seeking an interim injunction, the first issue that arises is whether the SHA between AI and Modi, to which WIU is not a party, should prevail notwithstanding the termination of the Implementation and Licence Agreements to which only WIU and AI are parties. This in turn hinges on the tenability of the case of MAIGPL about the economic unity of AG, AI, WIU and UOP which incidentally has been rejected by the learned Single Judge of this Court in the judgment dated 25th May 2009. It must be appreciated that each of the above entities is distinct in law. In order to prove economic unity of the entities it is not enough to demonstrate that WIU, AI and UOP are subsidiaries of AG. Even the interchangeability of employees and management may not per se decide the issue. It is not is dispute that none of the agreements referred to, and the SHA in particular, contains a clause that states that AI while executing any of them was acting as an agent of WIU or UOP. Understandably therefore it was urged on behalf of MAIGPL that such agency must be taken to be implied on a reading of certain other documents like the representation made by WIU to the HLC in the USA. As regards the question of implied agency, it would have to be determined in terms of Section 187 of the Contract Act, and that in turn would require evidence to be led at the trial. From a reading of the agreements however no such agency is able to be inferred. On the other hand it appears that specific obligations attaching to each of the entities have been spelt out in the agreements. It must be recalled that the addendum dated 6th September 2002 to the SHA was signed by MAIGPL as well. That document incorporated in toto the respective obligations of the parties to the Implementation Agreement, i.e. WIU and AI, and the consequences flowing from the termination of the Implementation Agreement. It would be plainly contrary to the intention of the parties if notwithstanding the termination of the Implementation and Licence Agreements between WIU and AI, and in the teeth of the addendum dated 6th September 2002 to the SHA, the Defendant No. 1 MAIGPL should be permitted to seek continuation of the obligations attaching to AI under the SHA (to which WIU is not party) minus the addendum.
26. The fact that AI has not been served and has not appeared yet in these proceedings, cannot make a difference to the situation where one of the parties to the Implementation and Licence Agreements, viz., WIU, has terminated the agreements. In terms of those agreements WIU exercised its option to terminate by giving a month''s advance notice. The submissions of MAIGPL regarding non-joinder of necessary parties, or about the alleged suppression of facts by WIU regarding the Master Agreement, and whether that makes a material difference to the outcome of the suit, would require to be examined at a later stage. Prima facie these submissions do not appear to dilute the plaintiff''s case for an interim injunction at this stage. The contentions advanced by MAIGPL about why WIU terminated the agreements and the consequential relief that Modi or MAIGPL would be entitled to if such termination is found to be illegal cannot possibly be decided in the present proceedings, as constituted, at the instance of WIU. Those might be issues in the proceedings that Modi seeks to initiate and will depend on the outcome of the appeal pending before the Division Bench. This is also the reason why this Court is unable to appreciate the apprehension expressed by learned Senior Counsel for MAIGPL that any order in these proceedings would prejudice Modi''s case before the Division Bench. It appears that the scope of the proceedings before the Division Bench is limited to determining the appropriate forum where the dispute raised by Modi should be adjudicated. Nevertheless it is clarified that the present order is not intended to influence the outcome of the appeal before the Division Bench.
27. There is force in the contention of the learned Senior counsel for WIU that by resisting the grant of an interim injunction restraining it from continuing to use the WIU trade property MAIGPL is in effect seeking the continuation of the Implementation Agreement and the Licence Agreement when both have been expressly terminated by the notice dated 22nd April 2009 issued by WIU. The facts narrated show that even on 27th September 2007, when it appeared that there was going to be an issue about AICTE not approving the courses offered, WIU desired to terminate the Implementation Agreement. That move was deferred when Modi assured WIU that no such recognition was required. In the light of the subsequent developments and in particular AICTE''s insistence that its approval is mandatory, Modi cannot possibly plead that WIU''s withdrawal of its courses being offered by MAIGPL was wholly unexpected. The contention of MAIGPL that its substantial investment in the joint venture and the consequential losses it is likely to suffer if the termination of the agreements by WIU is allowed to become effective, are factors that should weigh against the grant of an interim injunction does not impress this Court. The contention of MAIGPL that it is prevented by the `non-compete. clauses from offering courses on its own is contested by WIU which has categorically stated in this Court through its counsel that it does not want to be present in India and will have no problem if MAIGPL offers courses of its own, as long as it makes no use of WIU trade property.
28. In the considered view of this Court all or any of the above factors urged by MAIGPL do not constitute a strong enough justification for MAIGPL to continue to sell application forms of WIU courses, and also collect the completed forms and fees from applicants, after 22nd May 2009. Much less is there any justification in law for MAIGPL after 22nd May 2009 to continue to hold out through advertisements in the print and electronic media and through hoardings that it is offering WIU courses. The fate of students who have applied till then is already taken care of in the Implementation Agreement itself. Therefore, any interim injunction restraining MAIGPL from selling or accepting application forms for WIU courses after 22nd May 2009 will not prejudice the ones who have applied on or prior to that date. With the termination having become effective on 22nd May 2009 and the consequences thereof having been clearly spelt out in the Implementation Agreement, and carried into the SHA through the addendum, this Court is satisfied that the WIU has made out a prima facie case for grant of interim injunction.
29. On the question of balance of convenience, this Court notes that there is an increasing clamour among the youth, seeking career opportunities, for courses offered by foreign universities. This notwithstanding the fact that the fees for such courses are relatively unaffordable, leading many a prospective student to fund the pursuit of the course by borrowing loans. In this case, Modi has been charging a sizeable sum as fees for WIU''s courses. Then there is the question of recognition by the regulatory body AICTE. Clearly there is a question mark over that as well. In this background, the sooner a prospective unwitting young applicant is informed of the withdrawal by WIU from the offer by MAIGPL of its courses beyond 22nd May 2009, the better. Also, very often the enrolment of students to unrecognised courses takes place notwithstanding the pendency of litigation and thereafter the court is presented with a fait accompli. Equities are pleaded by placing the cases of the students whose careers are likely to be jeopardized in the forefront. Keeping in view all of the above factors, it appears to this Court that at the present stage, the balance convenience in granting interim injunction as prayed for is clearly in favour of the plaintiff WIU.
30. What are the intended consequences that flow from the termination of the Implementation and Licence Agreements? These have been spelt out in the former. Consistent therewith, WIU has stated in clear terms that it stands by its commitment as regards students who have applied till 22nd May 2009. To them it will continue to supply course material and grant degrees subject to successful completion of the course. WIU is bound down by its statement. The immediate task is to ascertain the exact number of students who have applied for WIU''s course up to and on 22nd May 2009. MAIGPL does not deny that it has been accepting application forms for enrolment to WIU''s courses even beyond 22nd May 2009. An affidavit dated 18th July 2009 of Mr. Dinesh Khosla, Head (Administration) of MAIGPL (which he refers to as MAII) states:
4. A prospective student is admitted to the WIU programme only upon WIU accepting his application. MAll does not admit any students. The student once admitted is a student of WIU and gets a WIU ID.
5. As per MA11 records:
* there are 949 active students undergoing various WIU courses
* the applications of another 17 students, pertaining to the pre 22nd May period, have been uploaded to WIU and are awaiting approval of WIU.
* WIU has rejected the applications of 3 students alleging that they pertain to the period post 22nd May 2009. The fees paid by these 3 students have been refunded by MAII.
* 57 students were approved by WIU, however, they have not joined the concerned WIU programme as yet. Many of these students had earlier availed of the option of refund given by the Defendant No. 1 in view of the uncertainty created by the wrongful termination notice issued by WIU. IT is not known whether these students will join back or not.
* There are additionally 270 application forms that have been sold prior to 22nd May 2009. The payment towards the sale of these application forms have been received by MAII (Rs.600/300/200), however the submission of the completed forms by the prospective students are still awaited. It is the submission of Defendant No. 1 that sale of an application form constitutes the first expression of intent from the prospective student in joining WIU programmes.
31. WIU contests the above statements and submits that a court commissioner should be asked to undertake, at its cost, a verification of the records of MAIGPL to find out the factual position. Without prejudice to his contentions, learned Senior counsel for MAIGPL informs that if such an order is passed MAIGPL will extend its full cooperation by making available all records to the court commissioner for verification. Accordingly, this Court appoints Mr. Naveen Nath, learned Advocate having his office at C-47 (Basement) Nizamuddin East, New Delhi-110013 (Mobile: 9810055157) as Court Commissioner to visit the office of MAIGPL at the address given in the plaint, between 4.00 and 5.00 pm today i.e. 20th July 2009 (and as often thereafter as he deems necessary) and ascertain from the records of MAIGPL, including but not limited to cash and account books, bank statements, registers and computer records, the number and names of applicants from whom a completed application form has been collected up to and including 22nd May 2009. Under the authority of this order, it will be open to the Court Commissioner to seek information from the bankers and other institutions involving MAIGPL to the extent it is necessary to carry out the mandate of this order. It will be open to the Court Commissioner to associate any other person of his choice to assist him in carrying out the mandate. Two representatives each of the plaintiff WIU and Defendant No. 1 MAIGPL are permitted to be present when the Court Commissioner carries out his tasks. A separate list will be prepared of showing the names and addresses of the applicants from whom the completed application form has been received including the total amount collected from each such applicant. A separate list likewise be prepared of those from whom the completed application form has been received at the office of MAIGPL after 22nd May 2009. In terms of WIU''s commitment as recorded, those applicants from whom application forms have been collected up to 22nd May 2009 will be permitted to complete their courses, and will be supplied course material and awarded degrees by WIU subject to successfully completing the course and fulfilling all conditions. As regards the students from whom application forms were received after 22nd May 2009 each of them will be repaid the total sum collected (including money collected at the time of issuance of application forms and fees if any) from each of them and a proper receipt obtained. This exercise should be completed by MAIGPL within a period of four weeks and a proper compliance shown to the satisfaction of the Court Commissioner. MAIGPL will extend its full cooperation to the Court Commissioner to enable him to carry out the directions contained in this order.
32. An appropriate clarification will be prominently published by MAIGPL, within two days, in the print and electronic media and on its website that in terms of the present order such of those applicants who have applied till 22nd May 2009 will be permitted to complete their course and such of those who have applied thereafter will be returned the full sum collected from each of them.
33. An ad interim injunction is issued restraining the Defendant No. 1 MAIGPL from representing to the public at large and the students in particular that Defendant No. 1/MAIGPL is offering the plaintiff WIU''s programs and courses of study and accepting any application or fee for enrolment in respect of such programmes and/or courses and from taking out or continuing to maintain any advertisement with respect to the above in any newspaper or other print/electronic media or by way of any hoardings/ billboards using plaintiff''s trade name/trademark and other intellectual property. In particular, Defendant No. 1 will remove from its website the any WIU course application form, and any announcement that it continues to offer WIU courses. Defendant No. 1 will forthwith remove all hoardings from the roads (including those on the DND Expressway photographs of which have been placed on record) and also withdraw forthwith all advertisements in the print/electronic media which hold out that MAIGPL it continues to offer WIU''s courses. Compliance in this regard will be shown to the Court Commissioner by MAIGPL. As regards the notice outside its office MAIGPL is permitted to indicate that students enrolled up to 22nd May 2009 will be supplied WIU course material and will be conferred degrees upon successful completion of the course and fulfilling all other conditions. The wording of this notice will be got cleared in advance by MAIGPL from the Court Commissioner.
34. The fees of the learned Advocate Commissioner is fixed at Rs. 75,000 which will be paid by the plaintiff within one week. The learned Advocate Commissioner is requested to file interim and/or final reports to indicate whether the directions have been complied with. It is open to the parties to seek further directions for this purpose.
35. The interim injunction is made absolute in the aforementioned terms. I.A. No. 7849 of 2009 is disposed of. IA No. 8725 of 2009 u/s 8 ACA is dismissed.
CS(OS) 1123/2009
36. List on 10th August 2009, the date already fixed.
37. Order be given dasti to the parties. A certified copy along with a complete set of papers be supplied to the learned Advocate Commissioner by the Registry forthwith.
