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Don't compete with Den Enjoy, Delhi HC restrains two MSOs

NEW DELHI: The Delhi High Court has restrained Omeshwar Singh and UCS Broadband Company from "commencing any business which directly competes with the business" of M/s Den Enjoy Cable Networks Private Limited till the next date of hearing.

Justice Vibhu Bakhru also ‘directed’ Den Enjoy to "take the necessary steps to invoke the Arbitration Clause."

While issuing notice to the respondents and listed the matter for 11 May 2017, the respondents were asked to file their reply within two weeks, and a rejoinder if any could be filed within a week thereafter.

The Court, in its order of 21 March 2017, also noted that "it appears that Omeshwar Singh is attempting to avoid his contractual obligations by using the corporate façade of UCS Broadband Company for improper purpose."

However, the Court also said this was only “prima facie view at an ad interim stage, and would not preclude the respondent from raising all contentions which would be considered at a later stage."

(Earlier, on 11 March 2017, the Court had "dismissed as withdrawn" a petition on this issue after Den Enjoy sought liberty to withdraw, and file a fresh petition.)

Den Enjoy had filed the case against Singh for engaging in competing business in complete disregard of the non-compete terms of the Share Subscription Agreement. It was alleged that Singh, through his company UCS Broadband, not only obtained / applied for Digital Access permission but also approached cable operators of Den Enjoy and broadcasters for content.

Omeshwar Singh is a founder shareholder, and had been Den’s agent from Lucknow. He presently holds 16.33 per cent shareholding in Den Enjoy.

Omeshwar Singh's counsel Vineet Bhagat had made an appearance as a result of a caveat filed by him through his counsel apprehending such a petition. The Court noted his argument that Section 27 of the Contract Act was clear that pre-compete condition was void and against the law. Bhagat said enforcement of any no-competition clause would amount to creation of a monopoly. He also argued that the agreement between Den Enjoy and the respondents was only related to Lucknow.

Den Enjoy Cable Networks Pvt. Ltd. is a joint venture company (JVC) of Den Networks Ltd. The company is engaged in the business of providing cable television services in Lucknow.

Den Enjoy, in a press release issued later, also said the order had come after its counsel Arun Kathpalia submitted that Singh is a director and one of the major shareholders of the company, and drew attention of the court to the clause 24 (non-compete) of the Share Subscription Agreement reached between the company and shareholders of the company.

However, Singh told that he had resigned from UCS Broadband Company on 30 July last year and even sold his shareholding in October 2016.

Singh also claimed that UCS was not using his Lucknow residential premises as its office, though the judge had noted that respondent’s counsel had not disputed this fact in Court. He said that he been living at different premises since April 2012.

Meanwhile, a UCS Broadband official informed that it has already obtained a licence to operate in Tanda in District Ambedkar Nagar (Uttar Pradesh) which falls under DAS Phase IV.

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