1997 C (PLP)

(v) Mrs. Dino Manekji Chinoy and 8 others v. Muhammad Matin (PLD 1983 SC 693); (vi) Messrs Universal Trading Corporation (Pvt.) Ltd. v. Messrs Beecham Group PLC and another (1994 CLC 726); (vii) Mrs. Shahzadi Baber v. Hina Housing Project (Pvt.) Ltd. and others (1994 CLC 1601); (viii) Karachi Catholic Cooperative Housing Society Ltd. v. Mirza Jawad Baig (PLD 1994 Karachi 194) and (xi) Beecham Group PLC and another v. Universal Trading Corporation (Pvt.) Ltd. (H.C.A. No. 145 of 1993). Mr. Khalid Anwar, learned counsel for the defendants has argued that the claim of plaintiff for agency rights is based on mere oral contract, the terms of which cannot be determined without process of recording evidence. He has further contended that the plaintiff has not specifically stated that terms and conditions of such oral contract in plaint and, therefore, in absence of clear terms he cannot claim that it was an agency coupled with interest. He has further emphasized on the distinction between agency and the distribution rights and contended that plaintiff was assigned work of distributing cigarettes with no authority to represent the defendant No.l. He has denied that the plaintiff was having any absolute distribution rights for Hyderabad District. It was further argued (on behalf of defendant No.l) that the plaintiff had never acted as an agent as defined in section 182 of the Contract Act, 1872. Mr. Khalid Anwar has also argued, in alternate, that it is not termination of an agency as alleged by the plaintiff but the defendant No.l has divided the rights of distribution of its products in the city of Hyderabad which is now to be distributed by both the plaintiff and the defendant No.2; that this arrangement has been acted upon and is in continuation for last more than 10 years. It was further argued that the plaintiff's case is not covered under section 202 of the Contract Act. He has referred to the case of Messrs World Wide Trading Co. v. Sanyo‑Electric Co. Ltd. and another (PLD 1986 Karachi 234) and Muhammad Riaz v. Federal Construction Corporation Limited and 4 others (1987 CLC 345). It is an admitted position that the plaintiff has not placed on record any written agreement in order to show that what was the exact nature of such agreement and its terms or conditions between the plaintiff and defendant No.

1. Though the plaintiff has attempted to define the established method of distributing cigarettes in the city of Hyderabad and has also claimed investment of huge amount, but the plaint is silent on the point that what were the exact terms and conditions between the plaintiff and defendant No. l for distribution of the cigarettes and what is the nature of huge investment which creates permanent interest of the plaintiff in the agency. It is pertinent to note that the present suit was filed on 31‑1‑1987 and the same day order for maintaining status quo was also granted. Lastly, on 1‑9‑1987 the status quo was ordered to be continued till next date by this Court. Thereafter, it was never extended. None of the parties have argued on this point as to what is the effect of non‑extension of this order and whether, in such circumstances, laches can be attributed to the plaintiff? The cases cited by Mr. Mushtaque Memon arise out of written contracts. The ratio laid down in these reported cases are based on the interpretation of admitted contracts which is absent in the instant case. In the famous case of Egypt Air (1980 SCMR 588) there was a general sales agency agreement dated 21‑9‑1973 in respect of looking after the business of Egypt Airline which was before the Court for interpretation. The cases of Muhammad Matin (PLD 1983 SC 693) are of no help to the plaintiff as the rule laid down by a learned Division Bench of this Court as well as by the Hon'ble Supreme Court .arises from a suit for specific performance of a contract. The case of Noor Muhammad (1987 CLC 393) deals with the question of lease and licence. In this reported case, the question involved was, whether the plaintiff who was running a shop at the Airport lounge, Karachi which was given by the Civil Aviation Authority was in the nature of lease or licence? In the present suit, the plaintiff is asserting their right to continue agency and, therefore, the case of Noor Muhammad is again of no help to them. The dispute which was involved in the case of Zubair Ahmed (PLD 1987 Karachi 112) arose out of termination of a dealership (Petrol Pump). The facts of this reported case are that by a written agreement the Pakistan State Oil Company appointed the plaintiff as their dealer to sell different petroleum and lubricants items produced by the defendants as well as to sell batteries, tyres and other automobile parts on a premises whereupon the plaintiff had also built a petrol pump/service station equipped with machinery and other facilities. It was in the background of these facts that a learned Judge of this Court came to the conclusion that the agency created in favour of plaintiff was coupled with interest and accordingly an interim injunction was granted, inter alia, on the grounds that the plaintiffs have earned a goodwill among their customers and termination would amount to uprooting their established business; that investments were made with the consent of the defendants. Reliance was placed on the case of Egypt Air. The case of Aref Effendi v. Egypt Air was also followed by another learned Judge in the case of M/ s. Universal Trading Corporation (Pvt.) Ltd. (1994 CLC 726) wherein the plaintiff filed a suit for declaration and injunction after being aggrieved of the termination of its distribution rights by the defendant, who, by a contract Appointed the plaintiff as exclusive distributor/agent of Horlicks in Pakistan. The plaintiff was also required to promote and increase sales of Horlicks in terms of plea said written contract. The defendant No. l did not file any counter‑affidavit the‑he injunction application. In absence of rebuttal and after referring to several to cases including Muhammad Aref Effendi (1980 SCMR 588), Sohrabji repot 1946 PC 6) and Balagamwala Oil Mills Ltd. (PLD 1990 Karachi 1) interim injunction was issued by a learned Judge of this Court. Against the said order, the defendants filed Intra‑Court Appeal bearing H.C.A. No.140 of 1993 which was dismissed by a learned Division Bench of this Court. Some similar points as of the instant case were also argued before the learned Division Bench in the above‑referred unreported case of M/s. Beecham Group PLC' which were answered in the following manner: "

8. The first question presented for determination in this case is whether the respondents were sole distributors of the appellants or not. Contracts with sole distributors or agents do not follow a single pattern and the primary necessity in each case is to ascertain with precision what are the express terms of the particular contract under discussion.

9. It is well‑settled that while interpreting the terms of the agreement, the Court has to look to the substance rather than the form of it. The mere fact that the words 'agent' or 'agency' or 'sole distributor' are used to describe the status of the parties concerned, is not sufficient to lead to the irresistible inference that the parties in fact intended that such status would be confirmed. Thus, mere formal description of a person as an 'agent' or 'sole distributor' or 'buyer' is not conclusive unless the context shows that the parties clearly intended to treat a buyer as a buyer and not as an agent or sole distributor.

10. We are of the view that extrinsic evidence to determine the effect of an agreement is permissible where there remains a doubt as to its true meaning. Evidence of the acts done under it is a guide to the intention of the parties in such a case and particularly when acts are done shortly after the date of the agreement." The cases of Shahzadi Baber (1994 CLC 1601) and Catholic Cooperative Housing Society Ltd. (PLD 1994 Karachi 194) arise out of different facts. In Mrs. Shahzadi Baber the dispute was between an allottee of a flat in huge building being constructed in the name of Rabia Garden by the defendant The plaintiff being allottee was seeking injunction against the builder restraining them from converting open space into flats. In Karachi Catholic Cooperative Housing Society the dispute arose on the disposal of an immovable property on the basis of a power of attorney and its revocation subsequently. The rule has laid down by the Hon'ble Division Bench of this Court on both these cases does not in any manner advance the case of the plaintiff. No doubt, section 186 of the Contract Act provides that an agency can be created by express or implied terms' In all the cases cited by Mr. Mushtaque Memon there was an express authority which resulted in creation of an agency or licences. In the present case, the no express term or condition on record. Therefore, in such circumstances creation of agency by implied terms is to be inferred from the facts are circumstances of the case, conduct of the parties and the ordinary course of dealing and transaction between them (See section 187 of Contract Act 1872). Mr. Khalid Anwar has also invited my attention to the two reported cases of this Court. In Messrs World Wide Trading Company (PLD 1986 Karachi 234) the plaintiff's application under Order XXXIX, Rules 1 and 2, C.P.C. was dismissed through which it was prayed that the operation of notice of termination issued by the defendant No. 1 be suspended. In this reported case, a memorandum of agreement was executed between the parties on two occasions i.e. in the years 1977 and 1981 through which the plaintiff was appointed exclusive agent for Pakistan by the defendant No. l for sale, marketing and distribution of freezers and refrigerators etc. etc. It was argued in the reported case, from the plaintiff's side that since there existed express contract of agency with interest in favour of plaintiff, such agency cannot be terminated unilaterally by defendant No. l and that such termination is mala fide. On behalf of defendant No. l it was argued that there did not exist agency contract between the parties; that there is no mala fide on the part of defendant No. l; that the plaintiff can be reasonably compensated in terms for the alleged breach of contract and that the balance of convenience lies in favour of defendant No.

1. Again, the case of Aref Effendi v. Egypt Air was relied upon by the plaintiff. A learned Single Judge of this Court Mr. Tanzeelur Rehman, J. (as he then was) answered the parties' contention, after referring to various provisions of the Contract Act, in the following manner: "However, I am afraid, the mere investment does ring no bell unless the interest which is allegedly involved fulfils the condition that it forms part of the subject‑matter of the contract as provided in section 202 of the Contract Act. After all, the plaintiff had to make certain investment in the business, for example, on hiring the shops/offices at several places, setting up of a service centre, employing staff etc., if it is to acquire sole‑selling rights of the products of defendant No. 1, to the exclusion of all others, but such investment does not necessarily fall within the scope of 'interest' as mentioned in the said section ......

19. To my mind, the two statutory illustrations given at the end of section 202 contemplate that the interest of the agent, forming subject matter of the agency, is to be some sort of an adverse nature qua the principal. So, according to the true construction and scope of section 202 the agency can be said to be coupled with interest where the authority of an agent is given for the purpose of effectuating a security or of securing an interest of the agent. This can be inferred from the documents forming the basis of agency or from the course of dealings between the parties and from the other surrounding circumstances . . . . . . . Even otherwise, 'the contract with interest' is terminable if it is so provided in the contract itself. The contract, in the instant case, provides a period of 3 months' notice before expiration date of the contract, which remains in force till 13‑4‑1987, as having been already extended automatically on the lest expiration date, under the terms of the contract. The question which is now agitating my mind is whether the plaintiff is entitled in law to an injunction, by way of suspending the operation and effect of the termination notice dated 25‑10‑1985 till 13‑4‑1987. During the course of arguments on 18‑2‑1986, Mr. Khalid Anwar, learned counsel for defendant No. l referred to section 21 of the Specific Relief Act, 1877 with illustrations to clause (b) that a contract to supply with all the goods of a certain class which may be required under the contract cannot be specifically enforced. I agree with the submission of the learned counsel that the contract dated 14‑7‑1977 is, in its nature, revocable subject to notice. " In Muhammad Riaz (1987 CLC 345), the plaintiff who was an Engineer by profession joined service with the defendant No. l and a general power of attorney was executed in favour of plaintiff on 2‑3‑1981 and vide agreement dated 1‑9‑1981 the plaintiff was appointed by defendant as its representative, sole and exclusive authorised agent for preparation and submission of bids, participation in meetings and discussion etc. and to accept award of any work supervision etc. etc. Again the case of Aref Effendi was referred by the plaintiff to obtain relief under Order XXXIX, Rules 1 and 2, C.P.C. which dismissed. It was held by a learned Single Judge of this Court Mr. Sajjad Akhtar, J. (as he then was) that the plaintiff has a prima facie case but sind other two ingredients i.e. balance of convenience and suffering irreparable were not established by the plaintiff, his application for interim injunction not be granted. It was further held in the last reported case that in case breach is committed, the plaintiff would be entitled to claim damages which always be quantified. There is another case of this Court wherein the impact of terminated franchise as well as the case of Aref Effendi v. Egypt Air was also considered In this case it was argued before a learned Judge of this Court, Mr. Ajmal (as his lordship then was) that the Hon'ble Supreme Court has not laid down general rule that in every case, in which a party alleges that the any agreement in his favour is coupled with interest, the Court is obliged to grant interim injunction, was held to be correct view. Therefore, in my view present plaintiff, to obtain relief as prayed in the instant application is request to show, for the purpose of establishing a prima facie case, that the right agency granted to the party is coupled with interest. The plaintiff is required, in addition to a good prima facie case, to show that the remaining ingredients i.e. balance of convenience and causing irreparable loss/injury also present in favour of plaintiff's case. I am conscious of the rule that it is not permissible to finally adjudicate the issue of existence of agency contract during hearing of an interlocutory application. I am equally conscious of the well‑established rule for the grant or refusal of an interim injunction. The plaintiff is required to show even at this stage that the oral contract was in the nature of an agency coupled with interest. In absence of a written contract, it is duty of the plaintiff to show that from the circumstances of the case and from the conduct of the parties there emerges relationship of agent and principal. All such ingredients which may lead to infer existence of agency in the case are absent. It is not the case of the plaintiff that it was acting as an agent on behalf of the defendant No. l for Hyderabad region and that interest of permanent nature was created. Mere establishment of warehouse is not sufficient to establish an interest of permanent nature. It is not alleged that such investments were made as a result of an agreement between the parties. Any investment made or construction of any structure of permanent nature by the plaintiff out of its own will, in order to improve its business did not amount to show existence of an agency contract. On the facts and circumstances discussed above, I am of the tentative opinion that the plaintiff does not have a good prima facie case. The plaintiff's case also suffers from laches as the interim order granted to maintain status quo, which expired on 1‑9‑1987, was not got extended. The plaintiff in the circumstances cannot with any justification argue that if injunction is not granted now, he would suffer irreparable loss. In case plaintiff ultimately succeeds he can be compensated by grant of damages. In the circumstances and in the interest of justice, I direct that the defendant No. l shall keep account of goods distributed through the defendant No.2, namely, Messrs Marketing Services (Pvt.) Limited and shall file the same every quarterly in Court with the Nazir. In view of the above directions, the plaintiff's application (C.M.A. 494/1987) stand dismissed. A .A./M‑131/K Order accordingly.