UNIKOL BOTTELERS LIMITED Vs. DHILLON KOOL DRINKS

JUDGEMENT

(1.) Pepsi Foods Limited (hereinafter referred to as 'PFL') is a company duly incorporated under the Indian Companies Act 1956 having its registered office at 307-308, Sector 35-B, Chandigarh, India. The Company is a joint venture of M/s Pepsico Inc., N.Y. USA, M/s Voltas Limited and M/s Punjab Agro Industries Corporation Limited. M/s Pepsi Inc., defendant No.3 is a multi-national company which is well known for its soft drinks under the brand name 'Pepsi'. One of the objects for floating defendant No.2 was to update the processed food technology in India and to export processed food products as an incentive, The Company was allowed to manufacture soft drinks concentrates and market soft drinks under the brand name 'Pepsi'. PFL has appointed various bottlers in specified territories in India for bottling and marketing the soft drinks. For this purpose PFL supplies the soft drinks concentrate to its bottlers. Defendant No.3, i.e. Pepsi Inc. holds trade marks for its popular drinks known as 'Pepsi', '7 Up', 'Miranda' and 'Ever Vess'. Under the bottling agreements the license to use these trade marks is granted by defendant No.3 to the bottlers. Defendant No.2 further registered a trade mark 'Lehar' which is to be used by the bottlers appointed by it for its various soft drinks alongwith popular trade marks Pepsi', '7 Up' etc.

(2.) Under an agreement dated 5.11.1990 PFL appointed the plaintiff to bottle and market the soft drinks under various trade marks of defendants 2 and 3. On the same date separate license agreements were executed between defendant No.3 and the plaintiff permitting the plaintiff to use the trade mark of defendant No.3 in 'Pepsi', '7 Up' and 'Miranda'. Another license agreement was executed on 1.12.1990 between the plaintiff and defendant No.3 regarding the soft drink 'Ever Vess'. PFL had to supply the concentrate for the manufacture of the soft drinks by the plaintiff under the various popular brand names. PFL sought to terminate the bottling agreement with the plaintiff for which it issued two notices both dated 6th December 1991. Thereafter the parties admittedly entered into another agreement (known as supplemental agreement) on 31st March 1992. As per the Supplemental Agreement the original agreement was to stand terminated with effect from 30th September 1992. The plaintiff filed the present suit on 26th September 1992 challenging the termination of the agreement between (he plaintiff and PFL regarding appointment of plaintiff as bottler and supplier/distributor of soft drinks in the terri tory specified in the agreement. The plaintiff also filed an application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure alongwith the plaint for an ad interim injunction to restrain defendant No.2 from treating the agreement as terminated and for direction to defendant No.2, i.e. PFL to continue to supply the soft drinks concentrate to enable the plaintiff to bottle and market the soft drinks. When the suit and the interim application came up for hearing on the first date, defendants I and 2 put in appearance in Court since they had already filed caveats on behalf of their respective parties and opposed the grant of any interim order. Counsel for defendant No. 2 made a statement at the Bar that PFL will not appoint any manufacturing bottler in place of the plaintiff till the next date of hearing. No other interim relief or order was granted. After the replies and rejoinders were filed to the interim application, the matter was heard at length. This order will dispose of the plaintiff's applications I.A.Nos. 12158 and 12250 of 1992.

(3.) The case of the plaintiff is that the arrangement between the parties was envisaged as a long term arrangement. As per the Bottlers Economics worked out by the defendants a long term arrangement for at least a period of ten years had to be there in order to enable the franchisee to recoup its investment. The Bottlers Economics was a document of defendants 2 and 3. The plaintiff had made an application for the bottling agreement on 15th March 1989. The plaintiff located the land at Sahibabad for its factory in April 1989. It was approved by PFL. On 1st May 1989 letter of intent was issued by defendant No.3 to plaintiff stating that franchise would be issued only if pre-conditions and time limits are met. On 25th May 1989 PFL confirmed to plaintiff its intention to enter into the bottling agreement upon requisite pre conditions being met. In October 1989 plaintiff applied to the I.C.I.C.I. for financial assistance stipulating return of capital in seven years. The plaintiff further made arrangements for the empty bottles. It incurred huge expenses on advertisement. It also incurred a liability towards the electricity supply undertaking on account of minimum guarantee charges for the electricity load required for the plaintiffs factory. From this the endeavour of the plaintiff is to show that even before the actual agreement which was to be entered into between the parties was negotiated, the plaintiff had incurred heavy expenses and had also committed itself to heavy liability in order to prepare itself for the franchise which was going to begranted to it. According to the plaintiff it had already committed itself and had undertaken such a heavy financial burden in the hope of having a long term relationship which alone would have enabled the plaintiff to recoup its investment. It is further the case of the plaintiff that the proposed agreement was made available to the plaintiff only in early May 1990 by which date the plaintiff was already heavily committed by way of financial obligations and it was in no position to bargain with PFLorto object to the termination clause contained in the agreement. The main grievance of the plaintiff qua the bottling agreement dated 5th November 1990 is the termination clause in the said agreement, i.e. clause 23. The said clause is reproduced as under:-