LAWS(SC)-1996-9-105

RAJASTHAN COOPERATIVE DAIRY FEDERATION LIMITED Vs. MAHA LAXMI MINGRATE MARKETING SERVICE PRIVATE LIMITED

Decided On September 17, 1996
RAJASTHAN COOPERATIVE DAIRY FEDERATION Appellant
V/S
MAHA LAXMI MINGRATE MARKETING SERVICE PRIVATE LIMITED Respondents

JUDGEMENT

(1.) The appellant, Rajasthan Co-operative Dairy Federation Ltd., issued an advertisement inviting applications for selling agents for its various products for the territories of Rajasthan, Punjab, Haryana, Himachal Pradesh and Delhi, on or about 19th of November, 1988. Seventy applications were received by the appellant. Ultimately, on 1st June, 1990, a Letter of Intent was issued by the appellant in favour of respondent No. 1 for appointing respondent No. 1 as the selling agent of the appellant for marketing of Saras Brand Dairy Products, inter alia, on the following terms:

(2.) Respondent No. 1 by its letter of 1st of June. 1990, acknowledged receipt of the Letter of Intent. The letter also noted that the agreement was to be signed on 12th of June. 1990. and that respondent No. 1 was going ahead, inter alia, with arranging an irrevocable bank guarantee from a scheduled bank. The letter contained a request to the appellant to release an advertisement announcing the appointment of respondent No. 1 as the selling agent. The appellant, however, did not release any such advertisement. Respondent No. 1, however, issued an advertisement in which respondent No.1 incorrectly described itself as the sole selling agent and further wrongly indicated that it was also the sole selling agent for Polypack Milk. The appellant protested against wrong statements in the advertisement.

(3.) The contract was not signed on 12th of June, 1990. The respondent did not attend on that date and asked for some time. The irrevocable bank guarantee for Rs. 15 lacs was also not submitted by respondent No. 1. The appellant, by its letter of 16th July, 1990, cancelled the Letter of Intent. In the letter, the appellant pointed out that the Letter of Intent issued to respondent No. 1 was conditional on his fulfilling certain obligations as a condition precedent to entering into a contract. The conditions, inter alia, were, (l) submission of an irrevocable bank guarantee of Rs. 15 lacs by 12th of June, 1990; and (2) execution of an agreement with the appellant by 12th of June, 1990. Besides these two conditions, respondent No.1 had also promised to submit to the appellant its profit and loss account and balance-sheet for the past year before the execution of the agreement. Respondent No. 1 had not done so. The letter also referred to the unauthorised advertisement issued by respondent No. 1 wrongly describing itself as the sole selling agent of the appellant and stated that in these circumstances, since respondent No. 1 had failed to fulfil its obligations within the stipulated period, the Letter of Intent was revoked. A telegram of the same date to the same effect was also sent to respondent No. 1.