ALLIED MOTORS Vs. SANDERSON AGENCIES

JUDGEMENT

(1.) M/s Allied Motors Private Limited, a company incorporated under the Companies Act, where holding distributorship right of the Burshane Gas known as "Bharat Gas". They under the distributorship were permitted to appoint sub dealers. Pursuant to the said authority, the plaintiff company appointed M/s. Sandersons Agencies, through its partners as their sub distributors/agents with effect from 1st January, 1961. This sub dealership agreement was renewed from time to time and lastly it was renewed on 1st January 1975. The purpose of creating and assigning rights of sub dealership was to handle on plaintiffs behalf fair and equitable distribution of gas to various customers. The defendants, according to the plaintiff, violated the terms of the agreement, accordingly the plaintiff company invoked Clause 32 of the Agreement dated 1st January, 1975 and terminated the sub-dealership agreement of defendant No. 1. This according to the plaintiff was done after obtaining the approval from "Bharat Refineries Ltd." (hereinafter called 'the principals'). The termination was communicated on 9th October, 1976. After the termination of the agreement, the defendants were bound to return the cylinders as well as the domestic pressure regulators and other records of the consumers including publicity material of the plaintiff company. Since the defendant did not do so, therefore, they were reminded by letters and ultimately by legal notice. The price of one cylinder at the relevant time was Rs.350.00. and that of domestic pressure regulator Rs. 25.00. After checking accounts, it was found that 342 cylinders and 9 domestic pressure regulators were kept by the defendant. The defendant was called upon to return the same but failed to do. Besides this, from the accounts submitted by the defendant, an amount of Rupees 3,302.56 P. was due after adjusting the amount of security lying with the plaintiff which was to the tune of Rs. 4.000.00. Over and above that, the defendant has also failed to provide S.T. Form No. 1 for a total value of Rs. 8,366.67 P. The liability of sales tax at the rate of 7% was that of the defendant which comes to Rs. 585.67 P. Thus the total amount due fromt he defendant payable to the plaintiff comes to Rs. 1,23,813.23 P. This amount, the defendant inspite of reminder has not paid, therefore, the plaintiff is also entitled to interest and the costs.

(2.) Defendant No. 3 was served and he filed the written statement contesting the suit inter-alia on the grounds that no violation of any term of the Agreement was committed by the defendant. Therefore, the plaintiff had no right to invoke Clause 32 of the Agreement. The termination of the rights of sub-distributorship has also been challenged. Moreover, the principal has already offered distributorship to the defendants. Hence, the basis of action by the plaintiff against the defendants is violative of the principle of natural justice. Since the principals have accepted the defendant as distributor, the termination is illegal. Moroever, the cylinders which were lying in the godowns of the defendents have been illegally removed by the plaintiff in collusion with M/s. Jawala Agencies and Bharat Petroleum. Therefore, the defendants are not liable to pay any amount.

(3.) During the pendency of the proceedings, it transpired that Shri S. S. Narula died on 24th September, 1980. He left behind the legal heirs, which were ordered to be brought on record. Out of the legal representatives brought on record, defendant No. 4(c) and (e) filed their written statements alleging that there was no cause of action surviving in favour of the plaintiff after the principal accepted the defendants to be the distributor. On behalf of defendant No. 4(a) it was pleaded that fraud is being played by the plaintiff in connivance with the defendants as those defendants in connivance with the plaintiff want to grab the entire property of defendant No. 4.