PETITIONER:
M/S. VIJAY TRADERS
Vs.
RESPONDENT:
M/S. BAJAJ AUTO LTD.
DATE OF JUDGMENT01/11/1995
BENCH:
FAIZAN UDDIN (J)
BENCH:
FAIZAN UDDIN (J)
SEN, S.C. (J)
CITATION:
1995 SCC (6) 566 JT 1995 (7) 608
1995 SCALE (6)150
ACT:
HEADNOTE:
JUDGMENT:
J U D G M E N T
Faizan Uddin, J.
1. This appeal at the instance of the plaintiff has been
directed against the judgment and decree dated 27,1,1992
passed by the High Court of Bombay in First Appeal No.
490/1974 affirming the judgment and decree dated 21,1,1974,
passed by the Civil judge, Senior Division, Ahmednagar
dismissing the suit of the plaintiff-appellant except for an
amount of Rs. 4419.81 which was admitted.
2. The appellants hereinafter shall be referred as
plaintiffs and the respondents as defendants.
3. The facts in brief leading to this appeal are that the
plaintiffs are a trading firm registered under the Indian
Partnership Act, having its Office at Station Road,
Ahmednagar. The defendants are a Company registered under
the Indian Companies Act as a Public Limited Company having
its Registered Office at Pune, The defendants are the
manufacturers of Scooters called Vespa Scooters and Vespa
Auto-rickshaws, hereinafter referred to as Vespa
commercials. Due to the shortage of automobiles at the
relevant time the Central Government in exercise of its
powers conferred by Section 18(G) of the Industries
(Development & Regulation) Act, 1091 had promulgated an
Order called the Scooter (Distribution & Sale) Control
Order, 1000″ and later on similar order was promulgated in
respect of Vespa Commercials, The plaintiffs alleged that
the defendants wanted to secure proper distribution and sale
of their products mentioned above and, therefore, wanted to
appoint Agents at different places including Ahmednagar.
Further case of the plaintiffs was that the defendants by
their latter/order dated 9/12-10-1964, appointed the
plaintiffs as their permanent sole selling agent for Vespa
Scooters and December 12, 1966 for the Vespa Commercials in
the district of Ahmednagar and thus they were the sole
distributors of the said vehicles and the appointment was
irrevocable. The plaintiffs took the plea that the
appointment constituted an agency coupled with interest and
the relationship between the parties was that of principal
and agent. The plaintiffs alleged that they secured 2700
orders for Vespa Scooters and 501 orders for Vespa
Commercials. But the defendants wrongfully terminated the
distributorship with effect from 1.7.1968 for Vespa Scooters
by their letter dated 4/7.8.1968 and by a subsequent letter
dated 28.8.1968 the defendants terminated the
distributorship for Vespa commercial also with effect form
1.10.1968 and directed the plaintiffs to transfer the orders
booked by them together with the registers and postal
deposit books to their Branch at Wakdevadi, Pune. The
plaintiffs alleged that this termination was wrongful,
illegal and without proper notice, causing loss to the
plaintiffs and, therefore, filed the suit for damages for
wrongful termination and rendition of accounts.
4. The defendants contested the suit by denying the
allegation that they and appointed the plaintiffs as their
agent. The defendants denied the relationship of agent and
principal as alleged by the plaintiffs. The defendants
pleaded that they had never appointed the plaintiffs as
their sole, permanent and irrevocable agents but their
relationship was that of principal to principal. The
plaintiffs used to pay for the said automobiles and sell
them independently. The defendants asserted that it was not
a fact that plaintiffs were appointed distributors. The
demand for supply was greater than the capacity of the
defendants to manufacture the vehicles and therefore, there
was no question of the defendant’s desiring to have a better
distributing agency. The defendant’s took the plea that the
plaintiffs were appointed as ordinary distributors which
could be terminated at any time. But the plaintiffs were
never required to procure any orders from the customers on
behalf of the defendants and that the defendants had a right
to terminate the contract with a particular dealer at their
sole discretion and their decision to that effect was final.
The defendants, in their pleadings refuted the claim of the
plaintiffs firm.
5. The learned Trial Judge held that the plaintiffs had
failed to establish that there was any relationship of agent
and principal between the parties and the termination of
distributorship was lawful and, therefore, dismissed the
suit of the plaintiffs except for an amount of Rs. 4419.81
which was admitted by the defendants, The High Court
reappreciated the evidence on record and recorded the
finding that there was no material to establish relationship
of principal and agent between the parties and that the
documents and the evidence on record indicated that the
plaintiffs purchased from the respondents the vehicles
allotted to them at the net dealer’s price, and retained the
defference as their profit and that being so the
relationship between the plaintiffs and defendants in
respect of sale by the plaintiffs’ was not the relationship
of agent and principal. With these findings the High Court
affirmed the judgment and decree of the Trial Court and
dismissed the plaintiffs appeal against which this appeal
under Article 136 (1) of the Constitution of India has been
preferred.
6. Learned counsel for the plaintiffs-appellants contended
that the distribution and sale of the Vespa Scooters and
Vespa Commercials were regulated and controlled by Scooter
(Distribution & Sale) Control Order, 1960 and after the
plaintiffs were appointed as sale distributors by the
defendants the defendants were under an obligation to sell
the products to the customers whose orders were booked by
the plaintiffs for which the defendants gave their own
guarantee/warranty for the vehicles manufactured by them and
the defendants also gave guarantee cards duly endorsed by
them at the time of delivering the vehicles. He also
submitted that the intending purchasers of the vehicles were
required to apply in the prescribed form with a prescribed
guarantee from the post Office payable to the dealer at the
time when vehicles would be ready for delivery and the
plaintiffs in the capacity of a dealer of the respondents
entered the names of such purchasers in the register in
accordance with the date of receipt of applications and the
vehicles were delivered to the intending purchasers
according to the serial order in the said register and that
these facts coupled with latter dated 8,10,1984 with regard
to the appointment of plaintiffs-appellants as distributor,
clearly established that the relationship between the
parties was that of an agent and principal, Learned counsel
for the plaintiffs-appellants therefore, vehemently urged
that the view taken by the learned Trial Judge as well as by
the High Court is erroneous and deserve to be set aside.
7. In view of the afore-mentioned facts and circumstances
the short question that arises for consideration is whether
there existed a relationship of agent and principal between
the parties or there was only relationship of buyer and
seller between them.
8. Here a reference may be made to Section 182 of the
Contract Act which defines an agent thus :
“An `agent’ is a person employed to do
any act for another of to represent
another in dealings with third persons.
The person for whom such act is done or
who is so represented, is called the
“principal”.
It has, therefore, to be seen whether in the present case
the plaintiffs were employed by the defendants to sell their
products i.e. Vespa Scooters and Vespa Commercials to the
customers on their behalf or while so dealing they
represented the defendants in the transaction with third
parties i.e. the ultimate purchasers of the vehicles so as
to bring the defendants in the category of the principal and
the plaintiffs as their agent.
9. In order to determine the relationship between the
parties it would be appropriate to look to the contents of
letter dated 9.10.1964 by which the plaintiffs were
appointed as dealers/distributors by the defendants of their
products and the evidence on record as there is no written
contract precisely setting out the nature of contract
between the parties. The letter dated 9.10.1964 on which the
plaintiffs-appellants have placed reliance to spell out the
relationship of agent and principal between the parties
reads as under :
“We have pleasure in appointing you
distributor for Vespa Scooters at Ahmed
nagar. Your territory will be city of
Ahmednagar.
We have already explained to you the
procedure regarding announcement in the
paper, registration of orders etc., you
should accordingly arrange for the
necessary advertisements in the papers
and start the registration of orders
seven days after necessary announcement
appears in the paper.
10. From a bare perusal of the contents of the letter
reproduced above it is difficult to accept that it envisages
any relationship between the parties as that of agent and
principal but it relates to the appointment of the
plaintiffs as distributors and not as an agent to sell the
products of the defendants to purchasers, The question
whether the plaintiffs took the delivery of the vehicles
manufactured by the defendants in the capacity of an agent
for sale on their behalf or whether the plaintiffs
themselves purchased the vehicles out-right, would largely
depend upon the terms of the contract.
11. The terms of the contract are not clearly spelt out
from the letter reproduced above appointing the plaintiffs
as distributors and, therefore, the evidence produced by the
parties on record has to be looked into, One Hastimal
Chandmal Muner, a partner of the plaintiffs firm was
examined as a witness who deposed that the talks took place
in his presence in respect of the dealership with one
Firodia who represented the respondents and thereafter the
letter dated 9.10.1964 was received by the plaintiffs.
According to the terms of the dealership the dealer was to
get the difference between the retail and wholesale price.
He stated that when the scooter was sold to the customer,
the customer was entitled to three free servicings thereof
by the plaintiffs for which the plaintiffs were paid Rs.
21/- by the respondents. He admitted that the company used
to despatch the letters to the plaintiffs mentioning the
allotment sanctioned in a particular month and the
plaintiffs were communicated wholesale price of the scooters
allotted in that particular month and the plaintiffs used to
send the amount on receipt of such allotment letter. H also
stated the sometimes the delivery was made even before the
payment of the amount on account of the confidence that the
defendant-company had in the plaintiffs firm. He admitted
that as per rules the plaintiffs should send the amount
first and it was thereafter that the delivery was to be
made. He also admitted that the transport charges were paid
by the plaintiffs firm and that if the scooter was damaged
during transit it had to be suffered by the plaintiff-firm.
Almost similar was the statement of Sharaschandra Kamlakant
Paranjape examined on behalf of the defendants. He
categorically stated that normally deliveries of the
vehicles were made to the distributors on receipt of the
price and if the amount was not sent the defendants did not
despatch the scooters.
12. From the evidence discussed above it is abundantly
clear that the plaintiffs were buying the vehicles from the
defendants for resale and the assertion of the plaintiffs
about agency is quite inconsistent with the notice of
transaction between the parties, The evidence discussed
above clearly goes to show that the contract was one of sale
and if in fact the plaintiffs were intended to be
constituted as agents for sale of the vehicles on behalf of
the respondents the terms of the contract would have been
entirely different. It cannot be disputed that even an agent
can become a purchaser when the agent makes payment of the
price to the principal on his own responsibility. In such a
circumstance the agreement would be one between vendor and
purchaser and not one of principal and agent.
13. Here a reference may be made to a decision of this
Court in the case of State of Mysore Vs. Mysore Spinning and
Manufacturing Company Limited [AIR 1958 SC 1002] in which
the manufacturer sold the goods to the licensed export
dealers who exported the goods to the foreign buyers were
agents of the manufacturer or the export dealers themselves
were the principals and not the agent of the manufacturers.
This Court took the view that such a transaction would not
make the exporters as agents of the manufacturers because of
the very act of purchase, the exporters became the
principals buying as such, Similar was the view expressed by
this Court in Gordon Woodroffe & Co. Vs. S.K. M.A. Majid &
Co. [AIR 1981 SC 967].
14. Learned counsel for the appellants also submitted that
though the appointment of the appellant-firm as an agent was
irrevocable yet the respondent-company terminated the same
without reasonable notice as required by Section 206 of the
Contract Act. From the discussion afore-mentioned it is
clear that no relationship of agent and principal is
established between the plaintiffs and defendants and,
therefore, in this case, the question of application of
Section 206 did not arise. In any case it may be noted that
the respondent-company had given a notice terminating the
distributorship after about 15 days from the date of receipt
of said notice, The said period of 15 days cannot be said to
be unreasonable for termination of distributorship.
15. In the present case also as noticed above, it is clear
from the evidence that the contract provided that the
distributor will pay the price of the vehicles ordered and
delivery was to be given to the plaintiffs an payment of the
price, The defendant-company took no risk with regard to the
damage caused to the vehicles during transit and the same
had to be suffered by the plaintiffs-firm. Thus the contract
between the plaintiffs and the defendants would be one of
purchase and sale and not of any agency. In these facts and
circumstances the view taken by the two courts below cannot
be said to be erroneous so as to call for any interference.
16. In the result the appeal fails and is dismissed but
without any order as to costs.