CONTROL PRINT INDIA LIMITED Vs. CAB MACHINES

JUDGEMENT

(1.) THE plaintiffs have filed the above suit claiming a declaration that the agency agreement entered into between the plaintiffs and Defendant No.1 is valid, subsisting and binding on defendant No.1 and the defendants be ordered and decreed to perform the terms of the said agreement in its letter and spirit. Further declaration is sought that the purported termination of the agency agreement by fax message dated 28th March, 1995 is not in accordance with the terms of the agreement and is illegal, arbitrary and not binding on the plaintiffs and the agency agreement continued to be subsisting and operative. Damages in the sum of Rs. 7,24,00,000/- in lieu of performance of the agency agreement are also claimed.

(2.) THIS Notice of Motion has been taken out by the plaintiffs with prayers that the defendants be directed by a mandatory interim order to operate the agency agreement between the plaintiffs and defendant No.1 by routing all sales of equipments of defendant No.1 in India, Pakistan, Nepal, Bangladesh and Srilanka only through the plaintiffs and to pay to the plaintiffs commission. . . . . . . . . . . . (sic -ed) invoice value of all equipments sold by defendant No.1 in terms of clause 2 of the agency agreement and to furnish full and final accounts in this Court for the sales effected in the countries mentioned above and deposit the commission in terms of clause 2 of the agency agreement in this Court with liberty to withdraw the same. It is further prayed that the defendants be restrained from appointing anybody else except the plaintiffs as selling agents for their equipment in the countries mentioned above. Further an order is sought to direct the defendants to retain the amounts payable by them to the defendants for purchase of equipments from defendant no. 1 as per particulars which are tabulated, in a statement appended to the Notice of Motion as Exhibit-A. An affidavit in support of the Notice of Motion has been filed. On 16th August, 1995, ad-interim injunction in terms of prayer clause (c) operative only upto 31st August, 1995 was granted. On 4th September, 1995, however, this Court after hearing the Counsel for the parties refused to grant any ad-interim relief. Thereafter an appeal was filed against the aforesaid order being Appeal Lodging No.692 of 1995 which came to be decided on 5th September, 1995. The learned single Judge was directed to dispose of the Notice of Motion on or before 30th October, 1995. The order dated 16th August, 1995 was not restored. However, Respondent No.1 was directed to furnish a Bank Guarantee in an amount of Rs. 30 lakhs until the Notice of Motion is disposed of. The Bank Guarantee was to be furnished within 10 days. Respondent No.1 was also given liberty in the alternative to deposit the amount in cash in the office of the Prothonotary and Senior Master. The Bank Guarantee was furnished. By order dated 5th December, 1995 time for disposing of the Notice of Motion was extended. The matter was again heard at length by Justice Dhanuka on 12th December, 1995. The Prothonotary and Senior Master was directed to encash the said Bank Guarantee for Rs. 30 lakhs as expeditiously as possible and release a sum of Rs. 8,56,000/- in favour of the plaintiffs. The balance amount was directed to be reinvested by the Prothonotary and Senior Master in the same Bank in a fixed deposit for such period as is deemed fit. On the basis of what is stated in paragraph 8 of the said order, preliminary issues were framed which are as follows. " (a)Whether this Hon'ble Court has jurisdiction to entertain this suit ? (b)Whether the jurisdictional clause extracted in para 5 of the affidavit in reply dated 2nd September 1995 is valid and enforceable as contended by the defendants in affidavit in reply or as to whether the said clause is void and of no legal consequence as contended by the plaintiffs in the plaint and affidavit in rejoinder herein. " Again matter appears to have been taken in appeal where an order came to be passed in terms of Minutes of the order dated 11th January, 1996. Order dated 12th December, 1995 of Mr. Justice Dhanuka was modified to the extent that payment directed to be made to the Respondent No.1 of Rs. 8,56,000/- shall be against a Bank Guarantee for the like amount to be furnished by Respondent No.1 to the Prothonotary and Senior Master pending the hearing and final disposal of the Notice of Motion. The matter came up for hearing before Mr. Justice Dhanuka again on 1st February, 1996. At that time it was stated by the Counsel for the plaintiffs that they would be interested in leading oral evidence. The matter was, therefore, adjourned for fixing date of hearing of the Notice of Motion when oral evidence can be recorded, if led by the parties. Thereafter Notice of Motion came up for hearing on a number of occasions before this Court. On 28th April, 1997 Counsel for the parties stated that it will not be necessary to lead evidence on the issue of jurisdiction at this stage. Thus the matter has now been taken up for final hearing.

(3.) BY a fax message dated 27th July, 1994 the defendant No.1 enquired from the plaintiffs whether they will be interested in becoming the agents of the defendant No.1. The defendants had come to know that the plaintiffs were associated with a firm known as "beta Instruments". Belgium and had been referred to the plaintiffs by them. Plaintiffs replied that they would be interested and that further negotiations can be conducted with their Mr. Joshi who would be visiting Geneva in August, 1994. Mr. Joshi did visit Geneva between 24th and 28th August, 1994. Defendant No.1 had made arrangements for the stay of Mr. Joshi in Switzerland. The proposal for the agency agreement was forwarded by a fax message by the defendant No.1 to the plaintiff on 29th November, 1994. From 27th July, 1994 till the termination of the agreement there was continuous interaction between the plaintiffs, defendants and the proposed clients of the defendants. Messages were sent by the defendants to various parties in India indicating to them that the plaintiffs were the agents of the defendants in India and the other countries mentioned in the proposal for the agency agreement, hereinafter called "the proposal". Even the visit of the defendant No.2 to India on three occasions were organised in consultation with the plaintiffs. The proposed clients of the defendants were also making enquiries from the plaintiffs. The plaintiffs had managed to procure two orders from Gujarat Optical Communication Ltd. and GTCL Mobile Com Technology Ltd. on 18th March 1995 (Exhs. AA and BB ). The defendant No.1 by fax transmission dated 20th March, 1995 responded to the aforesaid orders by giving the quotations. On 27th March, 1995 plaintiffs in their letter requested defendant No.1 to use Zumbach Models or the equivalent Beta make instruments for the supplies to the aforesaid two customers. On 9th March, 1995 (Exh. Z) plaintiffs sent a fax message to defendant No.1 stating therein that the entire agreement is acceptable to them but for clause 4.2 which was sought to be modified. This request was renewed on 27th March, 1995. However, the plaintiffs received a communication dated 28th March, 1995 in which it was mentioned that defendant No.1 propose to open their own office in India and manufacture some of the parts locally and, therefore, it is mentioned that they were constrained to terminate the agreement with the plaintiffs as of 31st March, 1995. The plaintiffs were informed that they would be paying commission of one per cent on all written orders received prior to 31st March, 1995 for which a letter of credit is opened by 30th April, 1995 at the latest. The plaintiffs objected to the termination of the agreement by their letter dated 30th March, 1995. The Advocate's notice was also sent by the plaintiffs to defendant No.1 on 19th April, 1995. When no response was received the above noted suit has been filed and Notice of Motion has been taken out.