2006 PLP 367 (MLD)

CH. IJAZ AHMAD, J.

Brief facts out of which the present appeal has arisen are that the respondents had given agency in question as a Dealer for Sale and Service of the tractor in question on 3-8-1970 to the appellant. Agency was terminated by the respondents on 30-7-1981. The appellant being aggrieved filed a suit for declaration on 21-11-1981 in the Court of Civil Judge 1st Class, Sialkot against the respondents, which was decreed vide judgment and decree dated 20-7-1983. Respondents being aggrieved filed appeal before the appellate forum, which was accepted and the case was remanded to the trial Court. The learned trial Court after remand decreed the suit vide judgment and decree dated 22-10-1989. The respondents being aggrieved filed appeal before the appellate forum. During the pendency of the appeal the appellant was appointed as Dealer of the respondents vide letter dated 24-1-1990. Consequently, the appeal filed by the respondents was disposed of on the statement of the counsel of the parties. The respondents terminated the agency of the appellant vide letter dated 11-11-1997. The appellant being aggrieved filed suit for declaration with permanent injunction against the respondents on 21-11-1997. Respondents filed written statement by controverting the allegations levelled in the plaint. Out of the pleadings of the parties the trial Court framed the following issues: (1) Whether the plaintiff is entitled to the decree for declaration that the termination Letter No.MTL/DM/2072, dated 11-11-2007 issued by the defendants is illegal, mala fide without jurisdiction and the same is liable to be set aside with the consequential relief of restoration of Agency and back-benefits? OPP (2) Whether the termination of dealership by the defendants vide letter dated 11-11-1997 was in accordance with the terms of the dealership and as such whether the plaint is liable to be rejected under Order 7, rule 11 of C.P.C.? OPD (3) Whether there is no substance in the assertion of the plaintiff that a three months notice was required for termination and the present dealership between the parties was a fresh contract based upon defendant's letter dated 24-1-1990 and not on the agreement dated 3-8-1970? OPD (4) Whether the suit is not maintainable and whether no mandatory injunction can be granted in view of provisions of section 56(f) read with section 21(a) of the Specific Relief Act? OPD (5) Whether the suit is false, frivolous, vexatious and the defendants are entitled to special costs, if so, to what an extent? OPD (6) Relief. Respondents did not appear before the trial Court after filing written statement. The learned trial Court passed the impugned decree against the appellant ex parte. Issues Nos.2 to 5 were decided by the trial Court against the respondents as the respondents failed to appear and adduce evidence, whereas, Issue No.1 was decided by the trial Court against the appellant and consequently the suit of the appellant was dismissed vide impugned judgment and decree dated 9-4-2000, hence, the present appeal.

2. Learned counsel of the appellant submits that appellant was given Agency by the respondents on 3-8-1970. The appellant discharged duties in terms of the Agency till 29-7-1981 without any interruption. . Respondents terminated the agency of the appellant on 30-7-1981 under the political influence, which order was set aside by the Civil Court vide judgment and decree dated 22-10-1989. Respondents filed appeal against the judgment and decree of the trial Court to before the appellate forum. During the pendency of the appeal of the respondents in the earlier round of litigation the respondents restored the agency of the appellant vide letter dated 24-1-1990 in view of the letter dated 16-1-1990 of Government of Pakistan, Production Department to the respondent, therefore, action of the respondents is in violation of the original terms and conditions of the respondents as the respondents have to terminate the agency of the appellant after three months' notice to the appellant in view of the clause 13 of the original terms and conditions of the agency. He further submits that letter dated 24-1-1990 be read keeping in view the previous litigation read with letter of the Ministry of Government of Pakistan, Ministry of Production, Islamabad dated 16-1-1990, therefore, merely by mentioning the word 'appointed' appellant in terms of the letter does not mean that it was fresh agency. In fact it was restored by the respondents keeping in view the litigation and decree passed by the competent Court in favour of the appellant. He further submits that trial Court erred in law not to decide all the issues in terms of Order XX of the C.P.C., therefore, impugned judgment is not sustainable in the eyes of law. He further submits that onus of Issues Nos.2 to 5 is on the respondents who did not enter appearance, therefore, impugned judgment is not sustainable in the eyes of law. Submits that the impugned judgment is also not sustainable in the eyes of law on the ground that it is self-contradictory in view of the contradicting findings given by the trial Court in the impugned judgment while deciding Issue Nos.1 and 2 to 5, therefore, trial Court has committed material irregularity.

3. Learned counsel of the respondents submits that appellant has filed a suit for declaration with permanent injunction along with the prayer to the extent that letter of termination dated 11-11-1997 is without lawful authority, which is not sustainable in the eyes of law in view of sections 205 and 206 of the Contract Act read with section 56(f) of Specific Relief Act. In support of his contention he relied upon the following judgments:-- (1) (PIDC v. Aziz Qureshi) PLD 1965 (W.P.) Karachi 202 (2) (HBL and another v. Syed Zia ul Hassan Kazmi) 1998 SCMR 60 (3) W.P.I.D. v. Aziz Qureshi) PLD 1973 SC 22 (4) (Huma Enterprises and 3 others v. S. Pir Ali Shah and others) 1985 CLC 1522 (5) (M.A. Naser v. Chairman, Pakistan Eastern Railways and others) PLD 1965 SC 83

4. He summed up his arguments that dealership agency is not specifically enforceable in view of section 56(f) of the Specific Relief Act read with provisions of the Contract Act. He relied upon 1974 SCMR 519) Marghub Siddiqui v. Hamid Ahmad Khan and 2 others)

5. Learned counsel of the appellant in rebuttal submits that action was taken by the respondents initially under political influence at the time of termination of the Agency of the appellant by the respondents on 30-7-1981, which was restored on the basis of the decree of the Civil Court, therefore, second termination on 11-11-1997 is also a result of mala fide. He further urges that impugned order is hit by principle of natural justice, therefore, impugned judgment and decree is not sustainable in the eyes of law.

6. We have given our anxious consideration to the contentions of the learned counsel of the parties and perused the record ourselves.

7. It is better and appropriate to reproduce the basic facts in chronological order to resolve the controversy in the present case, which are as follows:-- The appellant was awarded agency by the respondents on 3-8-1970, which was terminated on 30-7-1981. Appellant filed a civil suit, for declaration, which was decreed on 22-10-1989 against which the respondents filed an appeal before the appellate forum. During the pendency of appeal Government of Pakistan, Ministry of Production sent letter to the respondent under the heading "Restoration of cancelled Millat Tractors Agency (M/s. Al-Mumtaz): Case of Major (Retd.) Khawaja Muhammad Yousaf, MPA.", which is to the following effect:-- "Dated the 16th January, 1990. The Chairman, Pakistan Automobile Corporation, Karachi. Subject: Restoration of Cancelled Millat Tractors Agency (M/s. Al-Mumtaz) case of Major (Retd.) Khawaja Muhammad Yousuf, M.P.A. Dear Sir, Please find enclosed a copy of Prime Minister's Secretariat D.O. letter No. F.5 (26)/JS(C)/89, dated the 10th January, 1990 on the above subject. You are requested to direct Millat Tractors Limited to set aside the termination order dated 30-7-1981 and treat Kh. Muhammad Yousuf as a dealrer as per the judgment of the Senior Civil Judge, Sialkot dated 22-10-1989. The matter of signing the new dealership agreement as per requirement of current dealership policy could be taken up subsequently similarly the issue regarding payment of compensation may also be settled later. The implementation report may kindly be sent to the Ministry urgently. Your faithfully, (Muhammad Raza Sabir) Section Officer Copy to:--

1. The Managing Director, MTL, Lahore.

2. Kh. Muhammad Yousuf, with the request to get in touch with MTL immediately for further necessary action. (Sd.) (Muhammad Raza Sabir) Section Officer" On the basis of the said letter the respondents issued letter to the appellant on 24-1-1990 under the heading "Appointment as MTL Dealer", which is to the following effect:-- "January 24, 1990 M/s. Al-Mumtaz Agencies, Katchery Road. Sialkot. Dear Sirs, APPOINTMENT AS MTL DEALER Further our Letter No. CMM/A-3 dated 17-4-1989 and your reply dated 27-8-1989. As directed by the Ministry of Production vide their Letter No.7(5)/89-PACO dated 16-1-1990, you are hereby appointed as our dealer. Your area of operation will be confined to the administrative limits of District Sialkot. Reference our discussion regarding signing of the company's agreement of dealership and compliance to dealership standards, please arrange to do the needful. In order to send the requisite information to ADBP branches through the Head Office, you are required to forward the following on your company's letter head:

1. Name, address and all particulars of all proprietors/partners in case of partnership.

2. An affidavit to the effect that no partner has ever been delisted on account of bad reputation and misconduct with ADBP borrowers and other clients.

3. Details of workship/after-sale service outlets in the territory of operation to be established by you. Yours faithfully, For Millat Tractors Limited (Sd.) Sohail Bashir Rana General Manager (Marketing)" In view of the aforesaid letters the appeal tiled by the respondent was disposed of having been infructuous on the statement of the counsel of the parties vide order dated 8-7-1993 by the ADJ, Sialkot. It is better' and appropriate to reproduce the statement of the counsel of the parties. The respondents terminated the Agency of the appellant vide letter dated 11-11-1997, the same is reproduced hereunder: "Ref: MTL/D-M/2072 Dated: November 11,1997 Al-Mumtaz Agencies. 91-Aziz Shaheed Road, Sialkot Cantt. Dear Sirs. TERMINATION OF DEALERSHIP As you know you had been initially appointed on 3-8-1970 as MF Main Dealer for the District of Sialkot by M/s. Rana Tractors and Equipment, the predecessor of Millat Tractors Ltd. (the Company) but the dealership had to be terminated on 30-7-1981 on account of your failure to abide by the Company's instructions for showing improvement in all fields of providing service to the customers of the area. However as a result of political pressure brought on the Company, you were reappointed as a parallel Dealer on 24-1-1990. While being so appointed, you were advised to establish dealership facilities within three months as per the Company's "A" Category Dealership standards. On reappointment, you started the business from your old premises located at Kutchery Road, Sialkot but the premises and the other dealership facilities provided there were found to be unsatisfactory. Your achievements too, in the performance of your dealership, were found to be far below the given targets. It was also found that since 1965, there had been no dealership premises (show-room, office, warehouse, workshop) and other facilities and dealership affairs were being run through yours owner's residence. You were in fact found to be creating negative competition in the area affecting further development facilities of the Company's dealers. You were, accordingly advised by the Company time and again to improve the dealership facilities and in this connection, the following letters were addressed to you, expressing the concern of the Company at the lack of improvement in your performance and urging upon you to show better result: (1) No.MSD/93/AMA/4425 dated 23-6-1993 (2) No. MSD/94/6307 dated 10-8-1994. (3) No. MSD/95/6556 dated 19-2-1995 (4) No. MTL/Sales/95/6804 dated 24-9-1995 (5) No. MTL/Sales/95/6091 dated 19-10-1995 (6) No. Sales/Revw/3-07 dated 2-5-1997 and (7) No. Sales/97/2072 dated 17-7-1997. The Company had even offered to extend through its Area 'Officer, any .assistance that you might need from the Company. But despite the aforesaid letters and advice given to you repeatedly to improve your performance, you have failed to show any marked improvement and your performance has remained unsatisfactory and far below the targets, as can be seen from the following: Particulars 1992-93 1993-94 1994-95 1995-96 1996-97 Tactors %age market share 17 21 25 8 5 Implement? (Rs .000) 17 8 Nil Nil Nil Spare Parts Sales?? (Rs:000) 69 100 435 714 211 Apparently, there is no valid reason for your such continued disappointing performance as the other dealer in the same area has been showing much better performance. Your failure to improve your performance is therefore attributable only to a lack of interest by you in continuing and promoting the business of the Company which is bound to affect adversely its image and its business. The Company is therefore, constrained to terminate your dealership with immediate effect. Yours faithfully, For Millat Tractors Limited (Sd.) (Latif Khalid Hashmi) Director Marketing"

8. It is better and appropriate to reproduce section 56(f) of the Specific Relief Act, 1877 and relevant provisions of Contract Act, 1872 i.e. sections 205 and 206:-- "Specific Relief Act, 1877. Section 56: Injunction when refused. An injunction cannot be granted: (a) ??????

??????????? (b) ??????

(c) ??????

(d) ??????

(e) ??????

(f) To prevent the breach of contract, the performance of which would not be specifically enforced; Contract Act Section 205: Compensation for revocation by principal or renunciation by agent.

When there is an express or implied contract that the agency should be continued for any period of time, the principal must make compensation to the agent, or the agent to the principal, as the case may be, for any previous revocation or renunciation of the agency without . sufficient cause. Section 206: Notice of revocation or renunciation.--Reasonable notice- must be given of such revocation or renunciation; otherwise the damage thereby resulting to the principal or the agent, as the case may be, must be made good to the one by the other."

9. The aforesaid provisions of the Contract Act specially section 205 was interpreted by the Bombay High Court in Vishnucharya v. Ramachandra (1881 Vol. 5 Bombay 253-256). The relevant observation is as follows:-- "The remedy for an improper revocation of an agency lies under ordinary circumstances, in an action for damages for breach of contract. By section 205 of the Contract Act the principal is bound to make compensation to the agent whenever there is an express or implied contract, that the agency shall be continued for any period of time, this would probably always be the case when a valuable consideration had been given by the agent". It is also settled principle of law that if a principal makes a premature revocation, the agent can only claim damages as per law laid down in Frith v. Frith (1906) AC

254. It is also settled principle of law that contract of Agency is dependent upon the confidence and trust which the principal has in his c agent, the principal can revoke the agency at his will, once this confidence is shaken, despite the fact that the agency is for a certain period. But he may have to pay damages to the agent it there is no sufficient cause for the dismissal. In arriving to this conclusion we are c fortified the law laid down in Lamb and Sons v. Goring Brick Coy, Ltd., (1932) 1 KB

710. The aforesaid preposition of law is also supported by judgment of Bombay High Court reported as Southern Chemical Works v. Muhmed Hussain Fakhar-ud-Din Maniar (AIR 1970 Bombay 128). The aforesaid provisions of the Contract Act were interpreted by the Karachi High Court in the case reported as Huma Enterprises and 3 others versus S. Pir Ali Shah and others (1985 CLC 1522) and laid down the following principle:-- "The dealership/sales agreement was terminated by National Motors Limited purportedly acting under clause 20 of the Agreement under which at the most three months' notice was required to be given. Even if, such notice was not given, at the most the plaintiff firm could claim damages from the defendants Nos.1 and

2. What plaintiffs were asking by the reliefs sought in this suit-declaration and permanent injunction was in effect specific performance of the dealership/sales agreement. But such agreement, in my view, was not an agreement, which could be got specifically enforced through the Court. If at all there was unlawful termination of the sales/dealership agreement, the plaintiff firm could have only asked for damages. In the circumstances suit for declaration and permanent injunction did not lie." The aforesaid preposition of law is also supported by the following judgments:-- (i) PLD 1973 SC 222 (Aziz Qureshi's case) (ii) AIR 1930 Cal. 676 (Shaw Wallac's case) (iii) AIR 1946 PC 6 (Sohrabji's case) (iv) PLD 1965 Kar. 202 (PIDC's case) (v) PLD 1974 SC 157 (Saeed Ahmad Khan's case) (vi) 1980 SCMR 588 (Muhammad Aref Effendi's case)

10. In case the aforesaid facts are put in juxta-position then it is crystal clear that the Government of Pakistan, Production Department has directed the respondents to restore the Agency of the appellant but the respondents have appointed the appellant as Dealer. Consequently, appeal filed by the respondents had become infructuous on the statement of the counsel of the parties before the ADJ, Sialkot. In the statement it is specifically mentioned that, which was not denied by the counsel of the appellant in his statement as reproduced above. The meaning of is "appointed" as is mentioned in Ferozsons Urdu English Dictionary (Revised Edition). The letter of appointment was accepted by the appellant, therefore, appellant is debarred to wriggle out from this position on the well-known principle of approbate F and reprobate as per law laid down in PLD 1971 SC 376 (Ghulam Rasool's case).

11. In view of what has been discussed above, we do not find any infirmity or illegality in the impugned judgment of the trial Court which is in consonance with the mandatory provisions of sections 205 and 206 of the Contract Act read with section 56(f) of Specific Relief Act as per law laid down by the Superior Courts in the aforesaid judgments, therefore, we do not find any force in this appeal and the same is accordingly dismissed with no order as to costs. S.A.K./A-602/L?????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.