While Commercial Speech Falls Within Free Speech, Contract Prohibit Adverse Remarks: Bombay HC Imposes 90-Day Injunction On Wonderchef's Distributor

Observing that commercial speech is a part of 'free speech' guaranteed by the Constitution of India, the Bombay High Court imposed a 90-day injunction against an Australia-based distributor of Wonderchef Home Appliances, owned by Celebrity Chef Sanjeev Kapoor, from making any comments or communications which could harm the reputation of the company, due to a contractual clause preventing them from doing so.Single-judge Justice Somasekhar Sundaresan while imposing the injunction, also ordered Wonderchef to invoke Arbitration proceedings under the Arbitration and Conciliation Act, 1996."It would be necessary for me to record that commercial speech is eminently part of free speech. It is not easy for a Court to prohibit a party from expressing itself about its grievances about a product acquired in the course of commerce, since the factors to be borne in mind when considering a request for a gag order, is to see if such expression is truthful and warranted. Merely because speech is made in a commercial context, it would not cease to have the ingredients of free expression," the judge said in the order passed on January 27. The company petitioned the bench seeking a 'gag' order against the distributor under Section 9 of the Act, before initiating the Arbitration proceedings. It contended that the distributor was breaching the provisions of the Distribution Agreement signed between them in December 2017 by continuously sending emails and marking other international distributors in those emails, which are full of content that is against the products of the company and by all this, the distributor was disparaging and harming the company's repute. The company contended that all this was a breach of 'confidential information' of the company. Justice Sundaresan, however, said that to consider any and every comment on the petitioner's products as being “confidential information” would also be counter-intuitive – a distributor who is expected to publicly extol the virtues of the products, would, in terms of the interpretation canvassed by the petitioner, violation of confidential information since the distributor would be sharing information about the products.However, the judge took note of Clause 12.2(c) of the Agreement, which binds the distributor to conduct business in a manner that “reflects favourably at all times” on the products of the company and its reputation. "The Respondent is contractually obliged to conduct business in this manner in order to develop, promote and maintain such reputation and favourable reflection, with customers and to protect and preserve the goodwill and image of the Petitioner and the products. It is in this context that reliefs under this Petition are capable of being granted within the contours of the jurisdiction of Section 9 of the Act," the judge noted. The judge, in his order, observed that he was mindful that the company, being promoted by a celebrity Indian chef, enjoys a strong reputation. However, from what has been stated in the emails, the judge added, it would be hard to conclude that the same may cause any perceptible dent to the company's reputation. "Higher the stature of the celebrity, thicker the skin, is a reasonable expectation. If comments made in the course of a commercial dispute cannot dent the reputation and cause harm lightly, one has to be even more careful when considering whether and how to deal with a prayer for gagging free commercial speech," the judge observed. If the nature of the expression would lead a reasonable person of commerce to conclude that the publicly aired complaints constitute ranting by a disgruntled commercial counter-party, the likelihood of damage would not be easy to infer, the court added, further noting that in the instant case, another international distributor of the company, from Fiji, responded to the respondent distributor that "he is quite happy with the Petitioner's products and advised the Respondent to engage with the Petitioner to resolve disputes."Therefore, to balance the equities, the court imposed a 90-day injunction on the Australian distributor, "bearing in mind that free speech cannot be lightly proscribed."The judge directed the distributor to ensure that he is in full compliance with Clause 12.2(c) of the Agreement, i.e. to conduct business in a manner that reflects favourably at all times on the products and reputation of the petitioner and to refrain from indulging in any action that would violate Clause 12.2(c) of the Agreement. "Put differently, during the aforesaid period, the Respondent shall not vitiate the atmosphere for the arbitration by sending out e-mails attacking the Petitioner's reputation. During such 90-day period, it is expected that the Petitioner shall actually invoke arbitration or take forward, the earlier proposal of the Respondent to go to arbitration," the judge ordered. With these observations, the judge disposed of the petition. Appearance:Advocates Malhar Zatakia and Kaushal Ameta...

While Commercial Speech Falls Within Free Speech, Contract Prohibit Adverse Remarks: Bombay HC Imposes 90-Day Injunction On Wonderchef's Distributor

Narsi Benwal

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