9911796707
TMI Blog1996 (12) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... ip business between Mr. Raj Chopra and Mr. Narender Anand. M/s. Competent Motors established its show room in Connaught Place and Service Station at Mathura Road, New Delhi. It is stated in the plaint that Competent Motors made huge investments in order to meet the criteria laid down by Mul for a dealer. Subsequent to the grant of the aforesaid dealership an agreement was executed by and on behalf of Competent Motors and also by and on behalf of Mul in the year 1983 on a standardised form of contract. It is stated that every dealer who is appointed by Mul in response to the advertisement issued by it was called upon to sign identical agreement and that there was no scope of negotiations with regard to any of the terms of the aforesaid standardised terms of the contract between the dealer appointed and MUL. (3) It is also stated that in order to meet the criteria laid down by Mul a dealer has to employ a large number of staff for the establishment of the show room and the service station and that the total value of the capital assets of M/s. Competent Motors amounted to ₹ 1,06,41,691.00 as per the balance sheet as on 31.3.1986. It has been further stated that on advertiseme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erminate or the occurrence of any event which would entitle the Company to terminate this Agreement forthwith the Company shall be entitled to appoint a new dealer(s) for the Territory and to accept orders from and deliver Products to such new dealer(s) notwithstanding that such Products may be delivered before the date of termination of this Agreement provided that the Company shall require any new dealer not to sell such Products in its capacity as a Dealer in the Territory or any part thereof before such date of termination. 23. SUPPLY After TERMINATION: If the Company continues to supply Products to the Dealer after the termination of this Agreement, this shall not be construed as a waiver of termination or as a renewal of this Agreement .Thus on 20.1.1988 the dealership which stood in the name of M/s. Competent Motors stood surrendered and separate dealerships were granted by the defendant to the erstwhile two partners namely Mr. Raj Chopra in the name of M/s. Competent Automobiles Pvt. Ltd. and Mr. Narender Anand in the name of M/s. Classic Motors (plaintiff). (5) It is stated that from 1988 to 1994 the plaintiff made huge investments and created fixed assets including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties would be entitled to their respective rights as a result thereof as might be available to them in accordance with law. It was made clear that this Court's order dated 20.4.1991 read with the order dated 18.11.1991 would be construed and understood in the manner indicated in the said judgment. (8) The defendants thereafter, by order dated 31.8.1994 terminated the dealership of the plaintiff with 90 days notice. Being aggrieved by the aforesaid termination of the dealership the plaintiff filed a petition under Section 20 of the Arbitration Act before this court, which was registered as Suit No.2005/1994. Along with the said petition, the plaintiff also filed an application under Section 41 of the Arbitration Act on which an interim order was passed on 9.9.1994 by this court permitting the plaintiff to book the vehicles up to 29.11.1994. The said order was challenged in the Supreme Court in a Special Leave Petition filed by the defendant and registered as Special Leave Petition (C) No.15796/1994. The Supreme Court by order dated 15.9.1994 while issuing notice on the petition granted an interim stay in respect of the order 9.9.1994 passed by this court. Thereafter the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff in case the plaintiff ultimately succeeds in the present suit pending in the High Court. It was however, made clear that the aforesaid direction to the defendant would not be understood or construed as permitting the plaintiff to hold itself entitled to use of the same by virtue of the Supreme Court's order pending decision in the suit. (11) Subsequent to the aforesaid direction of the Supreme Court, the suit was taken up for further, trial by this court, during the course of which, the parties filed their documents and on the basis of the pleadings of the parties the following issues were framed:- 1. Whether the agreement in favor of the plaintiff is legally and validly terminated by the defendant? 2. Whether the plaintiff is entitled to claim the decree for specific performance of the agreement dated 15.1.1988 between him and defendant No.1? 3. Whether the plaintiff is entitled to get a decree for injunction as sought for? 4. What order and decree? (12) During the trial, on behalf of the plaintiff 2 witnesses were examined and on behalf of the defendant also 2 witnesses were examined. (13) The counsel appearing for the parties advanced lengthy and in depth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terminating the agreement. (iii) That no reason existed for termination of the agreement and even if any reason existed for such termination, the same not being of such nature as would go to the root of the agreement, the agreement could not have been cancelled on such reason. (iv) That the agreement is a franchise agreement which stands on a different footing from that of other agreements and that the present agreement is of a permanent nature and indeterminable in character. (v) That Clause 21 of the agreement is void being against the public policy and is hit by Section 23 of the Indian Contract Act. (vi) The notice of termination on the ground that it was open to the defendant to terminate the agreement by 90 days notice on the same causes and reasons as are contained in the show cause notice dated 6.4.1991 is illegal and bad as against the said show cause notice there was an interim order operating passed by this court and sustained by the Supreme Court. (17) Mr. Arun Jaitley, Senior Advocate assisted by Mr. T.K. Ganju, appearing for the defendant not only strongly refuted the submissions of the counsel for the plaintiff but also submitted that the suit against the defenda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e breaches indicated in the notice dated 6th April, 1991 to which the plaintiff did not reply. Hence, the defendant has exercised independent right under Clause 21. (21) Relying on the aforesaid order, the counsel submitted that the defendant having not led any evidence at all to show that the aforesaid notice of termination was issued for some other reason or cause than that mentioned in the show cause, it is proved that the said notice was issued on the same grounds, reasons or causes as are contained in the show cause notice dated 6.4.1991, as against which there was an interim injunction order granted by the Court, injuncting the defendant and restraining it from taking any action on the show cause notice and accordingly, the aforesaid notice of termination having been issued in defiance of the Court's order, the same is illegal and void and is, thus liable to be set aside. (22) I have heard the learned counsel appearing for the defendant who also has taken me through the various orders passed by this court and also by the Supreme Court in connection with and subsequent to the issuance of the show cause notice dated 6.4.1991 and the notice of termination dated 31.8.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be available to them in accordance with law. The High Court order dated 20.4.1991 read with order dated 18.11.1991 shall be construed and understood in the manner indicated herein by us. (24) In view of the aforesaid directions of the Supreme Court, it is apparent that there was no restraint on the defendant exercising its right to terminate the dealership agreement of the plaintiff. The Supreme Court further observed that in case the defendant chose to exercise the said right, the plaintiff would be entitled to remedies in accordance with law. Under those circumstances, it cannot be said that there was any restraint operating regarding cancellation/ termination of the dealership agreement in favor of the plaintiff. The first submission of the learned counsel for the plaintiff, Therefore, is held to be without any force. Whether clause 21 of the agreement is void and is hit by Section 23 of the Indian Contract Act: (25) Clause 21 of the agreement stands extracted. By the aforesaid clause an option was given to both the parties who may by giving the other 90 days notice in writing terminate the agreement without assigning any cause. The counsel for the plaintiff submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Mr. R.C.Bhargava, who at the time was looking after marketing told us that this is a printed agreement for dealership and if we wanted the dealership we had to sign the same on dotted lines. He said that no change is possible in the dealership agreement. ... ... ... ... We did not see what was the agreement. Both myself and Mr. Raj Chopra signed the agreement. P.W.1 further stated in his evidence as follows:- Classic Motors signed the dealership agreement on 15.1.1988 and thereafter I changed the name to Classic Motors Pvt. Ltd. This new agreement was signed at 25, Kasturba Gandhi Marg, on the 11th floor in the defendant's office. ... ... ... ... ... I had asked him at that time whether there was any change in the agreement after the one signed by us earlier. It was earlier said that this was a printed agreement which they were obtaining from all the dealers from all over India and there was no question of any negotiations about the same at that stage. I had not read the clauses of the agreement. I had not read them as they had not allowed the same saying that they were similar to the agreement signed in 1983. ... ... ... ... ... ... ... I have no bargaining power for execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause is applicable and available to both the parties to the agreement. The stand taken by PW1 that he never read the aforesaid clause 21 of the agreement before 1991 although he had entered into such agreement with the defendant in partnership with Mr. Raj Chopra, as far back as 1983 and individually in 1988 after the dealership was given to him in his personal own firm's name, cannot be believed. PW1, as it appears, is an educated person and a successful commercial businessman. He has stated in his evidence that his assets include several properties and that he has rental income, farm house, motor workshop and business in real estate. It can never be believed that a person like PW1 would not read the clauses of the agreement including clause 21 thereof till the year 1991 when the definite evidence on record is that he had received a copy thereof atleast in the year 1986 from Mr. Raj Chopra. The dealership agreement further contains an endorsement just above the signature of PW1 to the effect that he had read the contents of the agreement. It appears that PW1 has taken such an extreme stand of not having gone through the contents of the aforesaid agreement till 1991 in order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , fraud, misrepresentation or mistake,' Section 15 16 define coercion and undue influence. What follows from these statutory provisions is that an agreement to be valid should be the result of free consent apart from other requirements. While dealing with the question of duress/coercion and unequal bargaining power one is really concerned with the question of free will i.e. did the parties enter into the agreement with a free will? It is the plaintiff who has raised the question of its will being dominated by the defendants and, Therefore, not being a free agent. Therefore, the plaintiff is on test. It has to be ascertained whether the plaintiff exercised a free will or not while entering into the Supplemental Agreement. For this purpose there are several factors which need to be looked into. They are - (1) Did the plaintiff protest before or soon after the agreement? (2) Did the plaintiff take any steps to avoid the contract? (3) Did the plaintiff have an alternative course of action or remedy? If so, did the plaintiff pursue or attempt to pursue the same? (4) Did the plaintiff convey benefit of independent advice? (32) Let me now examine and apply the principle of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded. Justice requires that men who have negotiated at arm's length, be held to their bargains unless it can be shown that their consent was vitiated by fraud, mistake or duress. The real test is to first establish that the means pursued were illegitimate in the sense of amounting to or threatening a crime, tort or a breach of contract (though possible not plausible breach of contract will suffice). Secondly, one must establish that the illegitimate means were a reason, though not necessarily the pre- dominate reason for the victim's submission. Applying these tests to the facts of the present case. I am unable to persuade myself to hold that the consent of the plaintiff to enter into the Supplemental Agreement was not free or was vitiated on any of the grounds urged before me and discussed hereinbefore. (34) The aforesaid tests when applied to the facts of the present case bear out that the agreement was free and not vitiated by any coercion or duress. Accordingly, clause 21 of the agreement cannot be held to be invalid on that count. (35) The question of a clause being against the public policy and/or arbitrary or unconscionable could definitely be advanced when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, its instrumentality, any public authority or persons whose actions bear insignia of public law element or public character are amenable to judicial review and validity of such an action would be tested on the anvil of Article 14. (37) The ratio of the aforesaid decisions, Therefore, cannot be said to be applicable in a case of dealership agreement entered into by the defendant, purely on private commercial transaction, who has been held to be not an instrumentality of State by a Division Bench of this Court in P.B.Ghayalod Vs . Mul others; AIR1992Delhi145 . (38) While enforcing the contract for a gas dealership by Bharat Petroleum the Allahabad High Court has held in the case of Shyam Gas Co. Vs . State; reported in AIR1991All129 , that the principle of unconscionability of a clause will not apply in case of commercial transaction where both the parties were businessmen but carved out an exception only in the Scheduled Caste quota in order to salvage the down-trodden and economically distressed. (39) The Privy Council in the case of 1979 (3) All England Reports 65 (Vol. V), on the question of economic duress leading to unconscionability, held that where the businessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery elaborate arguments is as to whether the agreement is indeterminable and permanent in character. Whether the agreement in question is indeterminable and permanent in nature? (45) The counsel appearing for the plaintiff submitted that clause 21 does not at all give the power to the defendant to terminate the agreement without any cause. According to the counsel by its very nature the agreement is indeterminable and permanent in character. It was further submitted that clause 21 of the agreement on which the defendant acted upon while terminating the contract cannot be read in isolation and that it has to be read harmoniously with the rest of the agreement as a whole. The counsel also submitted that the aforesaid clause 21 is to be interpreted in the light of the factual matrix and the setting in which the agreement was executed. According to him clause 21 is to be interpreted taking into consideration the background and the context in which the parties entered into the agreement and also taking into consideration the surrounding circumstances. (46) The counsel drew my attention to the advertisement inviting applications for dealership and submitted thereon that the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Railway Co.; reported in 1875 E I A 500 at page 564, 565 and submitted that the said observations apply equally to the present dealership agreement. The relevant portion of the said observation is extracted below:- Then my Lords, that being so, I am at a loss to see how it can be supposed that an agreement of this kind, the subject matter being such as I have described it, namely - the exercise of running powers over the Llanelly Railway which for all time would be of use to the London and North Western Railway Company - how it can be supposed, nothing being said in the agreement to that effect, that they entered into this agreement only with this view; this will be an agreement which shall be valid and binding on us and the Llanelly Company so long as we think fit on either side, and no longer; we are to provide the clerks: if we start a traffic of our own, if we exercise our running powers, we are to be compellable to carry the local passengers, and we must accommodate our rolling stock for the purpose of carrying that extra amount of traffic which we should otherwise not have had to carry; we must provide that stock, and we must also provide the necessary staff of clerks, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on mutuality. According to him if such a clause was not there and if the parties were not allowed to terminate the contract at their will the same would have amounted to interfering with the right of freedom of trade of either party in the realm of private contract. He further submitted that the defendant is a private company and so held by this court in the case of P.B.Gehlot Vs. M/s. Maruti Udyog Limited and others;(supra). He submitted that the said clause - in the context of a private company which is not an instrumentality of the State and not bound by the restraint and constraint of Article 14 means that no cause need to exist for exercising power under clause 21. Relying on the various clauses of the agreement the counsel submitted that the agreement was never intended to be permanent and that in the context of dealership sales agreement between two private parties agreement of the present nature could never be perpetual and that any one of the said parties is entitled to terminate the agreement upon the happening of an event and that either party may terminate without assigning any reason by giving 90 days notice and that none of the parties could be compelled to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence may also be made to the decision of Tsang Chuen Vs. Li Po Kwai; reported in Air 1932 Pc 255. In the said decision the Privy Council has held that where words of any written agreement are free from any ambiguity in themselves and where external circumstances do not create any doubt or difficulty as to the proper application of those words to claimants under the instrument or the subject matter to which the instrument relates, such instrument is always to be construed according to the strict plain common meaning of the words themselves and in such case evidence de hors the instrument for the purpose of explaining it according to the surmised or alleged intention of the parties to the instrument is utterly inadmissible. (53) That is the settled position of law in respect of admissibility of oral evidence in respect of a written instrument followed by various courts of India. In this connection reference can also be made to the decisions in Vellappa Gounden Vs. Palani Gounden another Air 1915 Mad 1079 and Panna Lal and another Vs. Nihai Chand Air 1922 Pc 46. More recently, the Supreme Court has approved the aforesaid principles of law laid down by the Privy Council in the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed thereafter and that notwithstanding the provisions of any clause either party may by giving the other 90 days notice in writing terminate the agreement without assigning any cause. Clause 22(c) further gives a power to the defendant that after giving of notice to terminate or the occurrence of any event which would entitle the Company to terminate this Agreement forthwith the Company shall be entitled to appoint a new dealer(s). Sub-clause (c) of clause 22 read with clause 21, Therefore, implies that two kinds of terminations of the agreement have been envisaged i.e. one under clause 3(c) 21 where a notice of termination could be given and second under clause 22(c) on the occurrence of any event which would entitle the company to terminate the agreement forthwith. It is pertinent to note that in the latter case even the requirement of 90 days notice as provided for in clause 21 is not a condition precedent for terminating the agreement under clause 22(c). Therefore, it is apparent from the aforesaid clauses in the agreement, by which the parties were bound, that the defendant is entitled to terminate the agreement without assigning any reason by giving 90 days notice or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, could not be made applicable to the facts of the present agreement as in our country there is no such legislation regulating or controlling a dealership agreement. On the other hand, section 14 of the Specific Relief Act provides for law governing Specific Performance and lays down that a Contract which is terminable cannot be enforced. (58) The Supreme Court in Saghir Ahmed Vs . State of U.P., [1955]1SCR707 noticed the doctrine of franchise as applicable in England and America. It observed that the doctrine of franchise or privilege has its origin in English Common law and was bound up with the old prerogative of the Crown. This doctrine continued to live in the American Legal World as a survival of the pre-independence days, though in an altered form. The place of the royal grants under the English common law was taken by the legislative grants in America and the grant of special rights by legislation to particular individuals or companies is regarded as franchise. The Supreme Court observed that the doctrine of franchise has no place in our Constitution. (59) A critical analysis of the various articles and decisions placed at the bar shows that termination of a franc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to be permanent. (64) In 1928 (1) Cha 447 the case of Credit on Gas Company it was held that the contract for supply and purchase of gas without determination and termination of the contract was held not to be permanent in character. (65) In Staffordshire Area Health Authority Vs. South Staffordshire Waterworks Co.1978(3) All E.R. 769 the Court of Appeal held that the contract for water supply to a Hospital at a given rate was terminable after giving reasonable notice. (66) The law, Therefore, laid down by the aforesaid decisions rendered by the various courts outside India did not intend to lay down a law that an agreement is indeterminable and permanent in character. The judgments of United States were in the context of the State Legislations therein and original scheme of such franchise was under public law. However, the law governing specific performance in India is covered under Section 14 of the Specific Relief Act, a provision similar to that does not exist under the American law. The scheme of legislation in United States and India is entirely different and unless and until there is Legislation on the similar line as existing in the U.S.A, it is not possible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs . Union of India; [1984]3SCR676 wherein it was observed that the expression `without assigning any reason' implies that the decision has to be communicated but for the reasons for the decision have not to be stated. It was held that the reasons must exist otherwise, the decision would be arbitrary. The case of Liberty Oil Mills (supra) was considered and referred to by the Supreme Court Along with other cases in the case of Srilekah Vidyarthi (Supra). But it is to be noted that in Srilekah Vidyarthi (Supra) the Supreme Court was also fully conscious of the difference between a contract between private parties and a contract to which the State is a party. It held there is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions acts for public good, and in public interest . It further held in paragraph 17 thus:- We are, Therefore, unable to accept the arguments of the learned Additional Advocate General that the appointment of District Government Counsel by the State Government is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically stated in the agreement itself. On a reasonable construction of the agreement in hand I hold that either party to the agreement was entitled to terminate the contract without assigning any reason by giving 90 days notice or even without giving any notice upon the happening of an event. Termination without cause in common law is a valid power which the parties may give to themselves. Whether the notice of termination is liable to be held as illegal and void as no cause exists for termination of dealership: (72) The counsel for the plaintiff submitted that the defendant issued a show cause notice dated 6.4.1991 spelling out various alleged breaches on the part of the plaintiff and calling upon the plaintiff to show cause why its dealership should not be cancelled. He also relied upon the averments made in the written statement that the agreement had been cancelled for valid and sufficient cause and not arbitrary or malafide reason. On the basis thereof, the learned counsel submitted that since the termination of the agreement was based upon the same grounds for which show cause notice was issued by the defendant the plaintiff is entitled to show that the said grounds are fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 7.81 Crores between the number of bookings reported by plaintiff as against the funds remitted by it to the Bank of America as found out during reconciliation on or about 22.2.1991. That there were inaccurate daily booking reports submitted by plaintiffs to the defendant reporting the number of bookings as 1229 as against only a figure of 490 is admitted by them. There was a further default and delay by plaintiff in depositing the admitted shortfall amount of ₹ 1.09 crores even in respect of the actual 490 bookings as reported by the plaintiff. (76) Sales Policy dated 7.11.1990 has been placed on record as Ex.D-1. The said policy lays down that a dealer is required to accept bookings from customers by way of deposit of a bank draft in the name of the defendant a/c. dealer name with Bank of America on a daily basis. There was no change of policy in that regard under the subsequent sales policy dated 1.1.1991 which is exhibited as Ex.PX-204 which was issued as a further clarification to sales policy dated 7.11.1990. That payment was received from customers by cheques instead of bank draft is admitted by PW-1. The fact that there was a short-fall of ₹ 7.81 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some of such bookings were cancelled subsequently. Besides the sale policy dated 28.3.1990 which was marked Ex.D/34 provides that all the FDRs for booking of vehicles must be free from banker's lien/encumbrance. The Income Tax department in its letter dated 31.1.1991, which is Ex.D-3 brought to the notice of the defendant that about 500 FDRs of the plaintiff issued by Vyasa Bank were found by them. In the said letter it was informed that the bank's Manager, Shri Ram Gopal had confirmed in writing to the Income Tax Department that the bank had a charge/lien in the reported FDRs. The plaintiff however, sought to explain away the same under its letter dated 15.12.1990 which is marked Ex.P-114 that all the aforesaid FDRs are not in their possession and they cannot comment upon 90 FDRs which are still with the Income Tax Department. plaintiff however, relies upon the certificate of Vyasa Bank which however, has not been produced in evidence and was marked only for the purpose of identification. Vyasa Bank admittedly is a tenant of the plaintiff and is also not a nationalised bank. The fact that about 500 bookings were made over a short period of one month only through Vyasa Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. (81) Similarly, the allegations made in para 4 of the show cause notice relate to cut off date. Mr. P.Nayyar's booking date was 11.5.1990, whereas cut off date at the relevant time in October, 1990 was declared by the defendant as 3.5.1990. The plaintiff accepted payment from Mr. Nair on 6.10.1990. According to the defendant no dealer could accept any payment from the customer beyond the cut off date, and Therefore, the defendant alleged that the plaintiff accepted the payment from Mr. Nayyar on 6.10.1990 contravention of the Sales Policy of the defendant. However, it appears, that the customer was going out of station and he intimated the said fact to the plaintiff vide Ex.P-112, and Therefore, the said amount was accepted. The said action in accepting the amount has also been explained by PW1 in his examination that he did so after contacting the Regional Manager. Since acceptance of the amount from Mr. Nayyar was at his request and after intimation to the Regional Manager, the same in my considered opinion, cannot be faulted. (82) Paragraph 5 of the show cause relates to failure to maintain reports properly. The Inspection reports proved as Ex.DW1/12 and Ex.DW1/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. It is not necessary for the court to find out the veracity of each of the allegations made in the said show cause notice in the present suit. However, as detailed above some of the allegations atleast, if not all are found to have strong basis and reasons and Therefore, it cannot be said that they are totally non-existent and baseless. The parties were private parties dealing in the realm of private contract. Therefore, it is for the defendant to decide whether in view of such allegations and evidence against the defendant the agreement should not be terminated or not. It cannot be said that the allegations made in the show cause notice are no reasons at all or false and/or malafide. As a matter of fact the said grounds as delineated in the show cause notice are specific and definite reasons. However, in view of the specific provision in the agreement that the defendant could terminate the contract in accordance with clause 21 without assigning any reason, which according to the defendant was resorted to in the present case, this finding appears to be not very material for the purpose of answering issue No.1. Was there malafide in the action of the defendant in terminating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegations demands proof of a high order of credibility. The evidence on record has been carefully perused by me on this issue. There is no credible evidence available on record to come to a finding that there was any malafide in the impugned action. Rather the factors delineated above prove and establish that no case of malafide has been made out in this case. In my considered opinion no adverse inference can also be drawn for non-examination of Shri R.C.Bhargava in this case. Was there waiver on the part of the defendant? (89) The plaintiff has further alleged that because in 1994 there was an action plan issued by the defendant in pursuance of which the plaintiff made investment, the show cause notice issued by the defendant should be held to be deemed to have been waived by the defendant in view of investment made by plaintiff in pursuance of the said action plan. The said contention of the plaintiff however, is without any merit, inasmuch as, since the plaintiff, prior to introduction of the said action plan in 1994, approached this court and obtained an injunction in his favor the plaintiff continued to be a dealer under the defendant and, Therefore, the defendant was obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion raised by the defendant was that the present suit is barred under Order 2 Rule 2(3) of the Code of Civil Procedure and also under the provisions of Order 23 Rule 1(3). Under the provisions of Order 2 Rule 2(3) Civil Procedure Code it is provided that a person must sue for his entire claim and cause of action. If however, he relinquishes any part of the same he cannot file a second suit without seeking for and availing of leave of the court. In the present suit, according to the defendant the plaintiff filed the second application under Section 20 of the Arbitration Act challenging termination of the dealership without obtaining leave while withdrawing the petition filed under Section 20 of the Arbitration Act seeking for appointment of an arbitrator and referring the disputes between the parties to an arbitrator in terms of the arbitration agreement. I have considered the submission and find the same to be without merit. The plaintiff filed the earlier petition under Section 20 seeking for reference of the disputes to an arbitrator. In the said petition he did not seek to challenge the validity of clause 21 of the agreement, for the purpose of filing the said petition was to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the breach, the person not breaching is not bound under the liabilities of the contract. It is already held by me in the foregoing paragraphs that either of the parties could terminate agreement in terms of clause 21 and 22 of the agreement. I have also found the said clause 21 to be valid. Accordingly, in my considered opinion, the provisions of Section 39 of the Indian Contract Act have no application at all to the facts and circumstances of the present case. (95) In view of the aforesaid discussions I hold that the agreement in question was legally and validly terminated by the defendant. Accordingly, the Issue No.1 is decided against the plaintiff and in favor of the defendant. (96) the next two issues were argued at length and are important and Therefore, I proceed to answer the said issues No.2 3 as well. Issues NO.2 3: (97) The aforesaid 2 issues being inter- connected they are taken up together for consideration. The counsel appearing for the plaintiff submitted that the plaintiff is entitled to seek for specific performance of the contract and that he is also entitled to the injunction as prayed for in the suit. The counsel relied upon the provisions of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covenant and Therefore, ex facie the provisions of Section 42 of the Specific Relief Act do not apply to the facts and circumstances of the present case and reliance on the same by the learned counsel for the plaintiff, in my considered opinion, is misconceived. The provisions of Section 14 of the Specific Relief Act appear to be relevant. The provisions of Section 14(1)(a) of the Specific Relief Act require that if a breach of contract can be compensated on payment of damages the contract cannot be specifically enforced. Sub-section (b) thereof provides that where enforceability of the contract depends upon the personal qualifications or volition of the parties, the court cannot enforce specific performance of its material terms. Sub- section (c) appears to be very material and relevant on the facts and circumstances of the present case. The said provision requires that determinable contracts cannot be enforced by decree of specific performance. The provisions of sub- section (d) state that a contract, performance of which involves the performance of a continuous duty which the court cannot supervise cannot be enforced by such a decree. On a discussion of the material terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right in contending that the further questions of public law based on Article 14 of the Constitution do not arise for decision in the present case and the matter must be decided strictly in the realm of private law rights governed by the general law relating to contracts with reference to the provisions of the Specific Relief Act providing for non- enforceability of certain types of contracts. It is, Therefore, in this background that we proceed to consider and decide the contentions raised before us. .... .... .... .... .... .... .... .... .... Sub-section (1) of Section 14 of the Specific Relief Act specifies the contracts which cannot be specifically enforced, one of which is `a contract which is in its nature determinable'. In the present case, it is not necessary to refer to the other clauses of sub-section (1) of Section 14, which also may be attracted in the present case since clause (c) clearly applies on the finding read with the reasons given in the award itself that the contract by its nature is determinable. This being so granting the relief of restoration of the distributorship even on the finding that the breach was committed by the appellant Corporation is contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
