PEPULAR SHOE MART Vs. K SRINIVASA RAO

JUDGEMENT

(1.) As these two appeals are interconnected they arc disposed of bythis common judgment. A.S. 934/86 preferred by the plaintiff arises out of suit O.S. 63/80 on the file of the II Additional Subordinate Judge, Kakinada. Transferred A.S. No. 2367 of 1987 filed by the defendant (plaintiff in O.S. 63/80) arises out of O.S. 23 of 1981. The plaintiff appellant M/s. Popular Shoe Mart - in A.S. 934 of 1986 is a manufacturer of footwear and also distributor of various other brands of foot-wear like Carona, B.S.C. etc., with several branches in the State. The branch in Kakinada with which the suit is concerned was opened in 1969 in a building situated on the main road. The branch was shifted subsequently to the premises bearing municipal No. 28-1-26 belonging to one Krishna Murthy taken on lease for a period of ten years on a monthly rental of Rs. 625/- for the first four years and at Rs. 650/- for the remaining six years with effect from the date of taking possession as per the terms and conditions contained in the lease deed Ex. B-19. The building was leased out, it is recited in Ex. B-19, to enable the first defendant to carry on business in foot-wear. It was agreed between the parties and so recited in Ex. B-19 that the first defendant deposited Rs. 10,000/- towards advance rent which was to be adjusted against monthly rentals at the rate of Rs. 200/- per month. The building was purchased by the second defendant, the wile of the first defendant, under a registered sale deed, the original of Ex. B-20 dated 7-6-78, for a consideration of Rs. 60,000/-. The case of the plaintiff is that the first defendant was appointed as manager to run the business in accordance with the terms and conditions mutually agreed between them and incorporated in Exs. A-3 dated 1-7-67, A-4 dated 6-4-69 and A-5 dated 1-12-1970. A fresh agreement superseding the previous agreements was entered into on 5-4-74. Ex. A-6 is the English version of the agreement and A-6 (A) its Telugu version. The first defendant being the manager, it was pleaded by the plaintiff, the relationship between them is one of employer and employee and, therefore, the lease of the plaint schedule premises was taken for the benefit of the plaintiff benami in the name of the first defendant. The branch exhibited the sign-board of the plaintiff-company and the business was run for the benefit of the plaintiff which was also known to the second defendant. The goods despatched by the plaintiff from time to time were sold by the first defendant at the prices fixed ; the registration certificate under A.P. General Sales Tax was issued by the authorities in the name of the plaintiff and the bills also were issued by the branch in the plaintiff's name. The first defendant was placing indents for goods required for the branch from time to time with the plaintiff and he also was sending sales, expenditure and stock statements to the head office. The agreements provide for payment of commission at a certain per centage on the amounts of sales effected in respect of different brands and varieties of foot-wear. The first defendant was to defray the expenses of the branch-rent, salaries of the staff etc.- from out of the commission amount and the net amount received by the first defendant was for managing the branch. It was alleged in the plaint that the first defendant stopped sending the statements of sales expenditure for the fortnight ending 15-12-79 onwards and with a mala fide intention, on 18-12-79 the first defendant filed a suit O.S. 956/79 renumbered as O.S. 23 of 1981 on the file of the District Munsif, Kakinada seeking a permanent injunction restraining the plaintiff from interfering with his stock, furniture etc., in the plaint schedule premises. It was alleged in that suit that a registered notice was issued by the first defendant on 17-12-79 terminating the agency with effect from 14-12-79 and that the sale proceeds up to 14-12-79 and the stock on band were adjusted towards the amount of deposit and commission due to the first defendant and, therefore, he became the owner of the stock in trade. It was asserted by the plaintiff that he was willing and prepared to pay the correct rent to the second defendant for the suit premises and in fact rents for the months of December, 1979 and January, 1980 were sent by money orders to the second defendant but the latter refused the same with mala fide motives. The suit was, therefore, instituted seeking a declaration (1) that the lease of the plaint schedule premises in the name of the first defendant was benami for the plaintiff, (2) that the first defendant was bound to render a true and complete account of the stocks received up to the date of the termination of the agreement 14-12-79 and hand over the stocks and furniture and (3) a permanent injunction restraining the defendants 1 and 2 from carrying on business in the plaint schedule premises.

(2.) Resisting the suit it was contended by the first defendant in thewritten statement that the lease was obtained by him for his own benefit and not for the benefit of the plaintiff. The Telugu agreement A-6 (A) is not part of the English agreement A-6 and the latter alone governs the rights of the parties. There is no reference in the English Agreement A-6 about the conferment of any benefit on the plaintiff ic respect of the lease of the plaint schedule premises. He also denied that he acted as the manager and asserted that he acted only as an agent to carry on the business on commission basis. The sign-board did not mention that it is a branch shop. He claimed that besides the security amount of Rs. 40,000/- he was entitled to commission. The rcason for his terminating the agency was that the managing partner of the plaintiff-firm wanted to grab a major portion of the commission amounts unauthorisedly. After terminating the agency the first defendant claimed that he was entitled to deal with the premises as he pleased. The second defendant was not willing to accept sub-tenancy of the plaintiff and, therefore, it was not open to the plaintiff to claim any benefits under the lease agreement Ex. B-19 between the first defendant and the previous landlord Krishna Murthy.

(3.) As already noticed supra, the first defendant filed the suit O.S.956/79 in the court of the District Munsif seeking a permanent injunction against the plaintiff in O.S. 63/80 restraining him from interfering with the furniture and stocks in respect cf the plaint schedule premises and the suit O.S. 956/79 was subsequently transferred to the file of the court of the Subordinate judge and renumbered as O.S. 23/81. Oa a joint memo filed by both the parties the two suits were clubbed and the evidence recorded in O.S. 63/80 was treated as common to both the suits.