1999 PLP 1040 (MLD)

"182. 'Agent' and 'principal' defined. An 'agent' is a person employed to do any act for another or to represent another in dealings with third person. The person for whom such act is done, or who is so representative, is called the 'principal'.

202. Termination of agency where agent has an interest in subject- matter. Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.

205. Compensation for revocation by principal or renunciation by agent. Where 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. "

13. For the decision of an interim application in hand it will be necessary to refer to above quoted sections. Section 182 of the Contract Act says that agent is a person employed to do any act for another or to represent another in dealing with third person. Agent has power on behalf of the principal to deal with third person so as to bind the principal. Under section 202 of the Contract Act agent should have an interest in the subject-matter.

14. In the present case as mentioned earlier the plaintiff used to purchase the drugs from the defendants on payment as any other customer and used to export the purchased drugs to the African and Middle East Countries. The plaintiff was entitled to have itself the entire sale proceeds. The drug/medicines purchased by the plaintiff from the defendant used to become the property of the plaintiff. It is not the case of the plaintiff that he used to export the product of the defendant for sale in the foreign countries and used to pay the proceeds to the defendant or used to account for with regard to such sales.

15. Apparently the case as set up by the plaintiff does not fall under section 202 of the Contract Act. The-finding is interim for the sake of deciding the present application only. The agency, if there was any, was cancelled without prior notice and without assigning sufficient cause which fact is supported by Annexure P/3 to the plaint.

16. As I have observed, tentatively that the products of the defendant used to be purchased by the plaintiff, which after the purchase used to become the exclusive property of the plaintiff as such section 202 of the Contract Act shall have no application for the reason that the plaintiff used to export the drugs/medicines of which he himself was the exclusive owner whereas the defendant after sale of the products to the plaintiff had no right or lien over the said goods. Section 202 of the Contract Act visualizes the situation where actual owner of the subject-matter would be the principal but some interest with the authority of the principal would pass on to the agent.

17. The learned counsel for the plaintiff has cited several cases including PLD 1986 Kar. 234 Sanyo's case, 1980 SCMR 588 Egypt Air Case, 1994 CLC 724, and PLD 1987 Kar. 112 (Zubair Ahmed v. Pakistan State Oil Co. Ltd. and another).

18. The defendant's counsle has also cited the cases reported in 1973 SCMR 555 (West Pakistan Industrial Development Copropration Karachi v. Aziz Qureshi) and Sanyo's case reported in PLD 1986 Karachi 234, PLD 1983 SC 344.

19. In the case reported in PLD 1986 Karachi 234 (M/s. World Wide Trading Company v. Sanyo Electric Trading Company and another). The injunction application filed by the plaintiff was dismissed and it was observed that 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 other but such investment does not necessarily fall within the scope of "interest" as mentioned in the said section".

20. The case reported in 1980 SCMR 588, (Muhammad Arif Effendi v. Egypt Air) does not apply to the facts of the present case as in that case the plaintiff/agent had to furnish accounts to the defendant according to the agency agreement and the Hon'ble Supreme Court directed the petitioner to render accounts for six months i.e. July to December, 1979 to the Nazir of the High Court and thereafter, within period of fortnight furnish Bank guarantee for the account found due by the Nazir.

21. The cases cited by the plaintiff are distinguishable for the reasons that in the present case as observed earlier the plaintiff used to purchase drug/medicine from the defendant on cash basis and as an exclusive owner of the purchased drug/medicine, he used to export the same.

22. The essence of the sale is transfer of title of the goods for price paid or to be paid. The transferee in such case becomes liable to the transferor of the goods as a debtor for the price to be paid and not as an agent for the proceed of the sale. On the other hand the essence of the agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as property of the principal who continues to be the owner of the goods and who is, therefore, liable to account for the proceeds. For the purpose of grant of injunction apart from the ingredients of there being prima facie case in favour of the plaintiff, the E other important ingredient i.e. balance of convenience and irreparable loss have also to be considered. The defendant who are manufacturer of drug if restrained to export the same to the African and Middle East countries, it shall suffer irreparable loss and balance of convenience also lies in its favour, According to the contentions of the plaintiff counsel who relying upon Annexure P.2 argued that this agency agreement cannot be revoked unilaterly the plaintiff under the circumstances of the case cannot bound down the defendant to supply it, the drugs which the plaintiff may ask it to supply, under these circumstances, as the defendant is not bound to continue to supply the drugs to the plaintiff according to the plaintiffs' demand, the injunction asked for by the plaintiff will become redundant and as such cannot be granted.

23. In AIR 1967 SC page 181 (Gordon Woodroffe & Co. (Madras) Ltd., v. Shaikh M.A. Najid & Company) it has been held: "The first question presented for determination in this case is whether the defendants were acting as del credere agents of the plaintiff or whether the defendants were outright purchasers of the goods supplied to them by the plaintiff. In the approach to this question it is necessary to notice the distinction between a contract of sale and a contract of agency. The essence of sale is the transfer of the title to the goods for price paid or to be paid. The transferee in such case becomes liable to the transferor of the goods as a debtor for the price to be paid and not as agent for the proceeds of the sale. On the other hand, the essence of agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods and who is, therefore, liable to account for the proceeds. The true legal relationship between the parties in the present case has, therefore, to be inferred from the nature of the contract, its terms and conditions and the nature of respective obligations undertaken by the parties."

24. In this reported case there were 101 contract forms under which goods were purchased for export to London and the price of the goods purchased was fixed in the contract. The Supreme Court in this case came to the conclusion that the defendant was not an agent but was simply a purchaser though in this case the plaintiff used to furnish accounts.

25. The plaintiff's counsel in this case has filed affidavit-in-rejoinder and alongwith it has filed photo copies of certain documents which were neither filed alongwith the plaint nor were mentioned in the plaint. The parties should file all the documents alongwith their pleadings and if for any reason they could not file certain documents, then in/that case they must give reasons for not filing the same in the pleadings. The documents filed alongwith the affidavit-in-rejoinder, which documents neither having been filed alongwith the pleadings nor mentioned therein could not be looked into without the leave of the Court. The plaintiff's counsel have annexed alongwith the affidavit-in-re joinder letter/certificate of the defendant dated 2-1-1993, another letter/certificate dated 26-11-1990 and tried to argue that the plaintiffs were appointed as sole export agent under these two documents. These documents were neither filed nor relied upon by the plaintiffs in the plaint. Further, these documents were written much prior to Annexure P and P-1 to the plaint, on the basis of which the plaintiff has claimed the Agency in his favour. These documents, therefore, do not advance the case of the plaintiff in any manner,

27. If the plaintiff's alleged agency agreement has been terminated by the defendant illegally then in that case the plaintiff can adequately be compensated by means of grant of damages, under the circumstances of the case after the trial of the suit.

28. As submitted by the defendant's counsel the plaintiff after the termination of the alleged agency agreement have been purchasing drugs from the defendants and they are free to continue such purchases on cash basis, for consumption in the local market as well as for the Middle East and African countries. Assessing the contentions of the parties counsel and perusing the documents filed by them, tentatively without affecting the merit of the case I am of the opinion that the plaintiff is not entitled to injunction as prayed, the injunction application is, thus, dismissed.

29. In view of the order passed on C.M.A. No.6752 of 1996) the present application (C.M.A. No. 7252/1996) has become infructuous and accordingly the same is dismissed. H.B.T./R-53/K/ Application dismissed.