IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE R.BASANT & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN TUESDAY, THE 5TH APRIL 2011 / 15TH CHAITHRA 1933 Arb.A.No. 16 of 2011() ------------------------------- OP(ARB) NO.1257/2010 ON THE PRINCIPAL DISTRICT COURT, ERNAKULAM. .............. APPELLANT ------------------ M/S.WHEELS MOTORS, A REGISTERED PARTNERSHIP FIRM HAVING ITS REGISTERED OFFICE AT KHADRE CENTRE, N.H.BYPASS, ALUVA, REP.BY ITS PARTNER, SREEJA MURALEEDHARAN, W/O.SHRI.V.T.MURALEEDHARAN, RESIDING AT BINDU VIHAR,PARAT LANE, ALUVA-683 101. BY ADV. SRI.DINESH R.SHENOY RESPONDENT(S): ------------------------- 1. M/S.MAHINDRA TWO WHEELERS LTD., A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, WITH ITS HEAD OFFICE AT MAHINDRAR 2 WHEELER LTD., D-1 BLOCK, PLOT 18/2,CHINCHWAD, PUNE- 411 019, REP.BY SANJAY MITTAL. 2. SANJAY MITTAL, VICE PRESIDENT- SALES AND CUSTOMER CARE,M/S.MAHINDRAR TWO WHEELERS LTD., D-1 BLOCK, PLOT 18/2, CHINHWAD, PUNE- 411 019. 3. MAHINDRA TWO WHEELERS LTD., REGIONAL OFFICE, 101, PENTA TOWERS, KALOOR, KOCHI- 682 017, REP.BY THE REGIONAL MANAGER, ANILKUMAR.T.V., MAHINDRA TWO WHEELERS LTD., REGIONAL OFFICE, 101, PENTA TOWERS, KALOOR, KOCHI-682 017. tss Arb.Appeal NO.16/2011 4. ANILIKUMAR.T.V., AGED 45, FATHER'S NAME NOT KNOWN, REGIONAL MANAGER, MAHINDRA TWO WHEELERS LTD., REGIONAL OFFICE, 101, PENTA TOWERS, KALOOR, KOCHI- 682 017. 5. TIRUPATI RAO, AGED ABOUT 45, S/O.RAO, ZONAL MANAGER, MAHINDRA TWO WHEELERS LTD., ZONAL OFFICE, 5TH FLOOR, RATHNA BUILDING, 372/231, TTK ROAD, ALWARPET, CHENNAI-600 018. 6. M/S.V.K.MOTORS, BEHIND KAROTHUKUZHY HOSPITAL, N.H.BYEPASS, ALUVA-683 101, REP.BY ITS MANAGING PARTNER, A.V.REYEED, AGED ABOUT 25, FATHER'S NAME NOT KNOWN. R1 BY ADV. SRI.SAJI MATHEW THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 05/04/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: tss R. BASANT & K. SURENDRA MOHAN, JJ. ------------------------------------------------- Arb. Appeal No.16 of 2011-D ------------------------------------------------- Dated this the 5th day of April, 2011 JUDGMENT Basant,J. The petitioner before the court below is the appellant before us. The petitioner had filed an application under Sec.9 of the Arbitration and Conciliation Act seeking an order of permanent prohibitory injunction restraining respondents 1 to 5 from appointing anybody else including the 6th respondent other than the petitioner as dealer of M/s Mahindra Two Wheelers Ltd., for the territory of Aluva and also to restrain them from supplying any vehicles or equipments or spare parts to the 6th respondent. 2. Fundamental facts are not in dispute. The petitioner was appointed as dealer for M/s Mahindra Two Wheelers Ltd., - the 1st respondent. Respondents 2 to 5 are officials of the 1st respondent. The 6th respondent is arrayed as a party alleging that the 6th respondent was likely to be appointed as an additional dealer by the 1st respondent for the very same territory which was being served by the petitioner/appellant. 3. The application was opposed. It was contended that the Arb. Appeal No.16 of 2011 -: 2 :- petitioner has no right to function as exclusive dealer. Prima facie the petitioner is not entitled to maintain the application for injunction against the appointment of an additional dealer, it was contended. 4. The court below considered the objections raised by the respondents. The court below took the view that under the contract entered into between the petitioner and the respondents, the petitioner is not entitled to function as exclusive dealer. Reliance was placed on Clauses 1, 25 and 26 of the contract entered into between them. On accepting the said contention of the respondents, the petition was dismissed as not maintainable. 5. Arguments have been advanced before us. It has been pointed out that subsequent to the impugned order, there has been termination of the dealership of the petitioner also. 6. The learned counsel for the petitioner/appellant contends that reliance on the provisions of the Specific Relief Act is not justified at all. Principles of Order 39 Rules 1 and 2 should have applied. 7. The learned counsel for the respondents contends that even accepting the entire contentions of the appellant, the prayer of the appellant for an order of injunction to restrain Arb. Appeal No.16 of 2011 -: 3 :- respondents 1 to 5 from appointing another dealer is not justified. Consideration of prima facie case, balance of convenience and irreparable injury must apply. Strong reliance is placed on the terms of Ext.R3(a) which clearly stipulates that the petitioner/appellant is not entitled to any right to be an exclusive dealer. We extract below Clases 1, 25 and 26: “1. APPOINTMENT ON NON- EXCLUSIVE RIGHTS: a. The Company hereby appoints the Dealer as its dealer on a non-exclusive basis in the Territory during the term of this Agreement, (i) for selling and distributing the Products and (ii) providing Sales and Aftr Sales Services, in the manner described in Schedule 1, hereto, on the terms and conditions hereinafter contained. b. The Company reserves the right to either directly or through one or more other persons or entities or dealers sell and/or distribute the Products in the Territory or any part thereof. c. The dealer will however, be obliged to provide after sales service to the Products directly sold by the Company or any other dealer of the Company. Arb. Appeal No.16 of 2011 -: 4 :- 25. TERMINATION BY THE DEALER: a. The Dealer may terminate this Agreement at any time and without cause, by giving written notice of thirty (30) days to the Company. In that event, the Dealer shall return to the Company, all other material lying with them, during the notice period. However the Company shall have the option and not the obligation to purchase/accept unsold products. 26. TERMINATION BY THE COMPANY: a. The Company may terminate this Agreement at any time without cause and without assigning any reason by giving the Dealer a written notice of thirty (30) days to the Dealer. b. The rights of termination provided herein are absolute and both the Parties have considered the possibility of making expenditures in preparing for the performance of this Agreement and possible losses and damages incident and resulting to each of them in the event of termination, and each has agreed to the provisions with respect to termination with full knowledge of such possibility and it is therefore the express intention and desire Arb. Appeal No.16 of 2011 -: 5 :- of both the parties that neither shall be liable to the other for damages or otherwise by reason of the termination or expiration of this Agreement at any time unless otherwise specified under this Agreement. c. The Company may also terminate this Agreement by written notice to the Dealer to be effective immediately, in the event of the happening of any of the following events: (i) The death or incapacity of the principal officer or a partner of the Dealer if in the opinion of the Company he was mainly responsible to look after the obligations of the Dealer; (ii) Any sale, transfer or relinquishment, of any substantial interest or any change in the ownership or management including in the case of a limited liability company, any change in the composition of the Board of Directors of the Dealer which has not been approved by the Company or any dispute, disagreement or controversy among partners, managers, officers or stock-holders of the Dealer, which, in the opinion of the Company may adversely affect the management or business of the Dealer; (iii) The insolvency of the Dealer, the Arb. Appeal No.16 of 2011 -: 6 :- filing of a voluntary petition for insolvency by the Dealer, the filing of a petition to have the Dealer declared as an insolvent, the appointment of a receiver or trustee for the Dealer, provided such appointment is not vacated within three (3) days of the date of such appointment, the execution by the Dealer of an assignment for the benefit of creditors or the conviction of the Dealer of an assignment for the benefit of creditors or the conviction of the Dealer or any principal officer, partner or manager of the Dealer for any offence which in the opinion of the Company may adversely affect the business or reputation of the Dealer; (iv) The abandonment or suspension of business without any reasonable cause, for more than ten (10) days by the Dealer.; (v) The failure of the Dealer to obtain or keep in effect any licnece required by State or local laws for performance of the Dealer's obligation hereunder; (vi) The failure of the Dealer to comply with any of the terms of this Agreement and/or breach of any of its duties/obligations/warranties including without limitat8ion the failure of the Dealer to develop the sales potential; (vii) The failure of the Dealer to use Arb. Appeal No.16 of 2011 -: 7 :- and/or stock genuine Products, spare parts, lubricants, accessories & consumables; (viii) In the event if dealer gets low MDEP score (Mahindra Dealer Excellence Program-evaluating system) for continuously two years.” 8. A reading of these stipulations, according to us, convincingly supports the conclusion of the learned District Judge. It is crystal clear that the petitioner/appellant has no right to claim exclusive dealership. The learned counsel for the appellant/petitioner contends that the contract/agreement - Ext.R3(a) must be read along with the practices of business whereunder no second dealer is appointed to serve the same territory. In view of the very specific terms of Clause 1 extracted above, we find no merit in this contention. Arguments are advanced before us to challenge the subsequent termination of the dealership. For the consideration of the challenge against the impugned order in the appeal, we do not think it necessary to go into that question in any detail. 9. Arguments are advanced that the appellant/petitioner is likely to suffer irreparable injury. We are unable to agree that the appellant/petitioner is likely to suffer any injury which Arb. Appeal No.16 of 2011 -: 8 :- cannot be compensated in terms of money. In that view of the matter, the impugned order does not suffer from any infirmity. 10. Considerations of balance of convenience also, according to us, do favour the respondents. Passing of the order of injunction claimed would lead to the very inconvenient situation of the respondents being compelled to operate exclusively with one dealer with whom they have reservations to operate. The 6th respondent who is represented by counsel points out that huge amounts have been invested by the 6th respondent claiming dealership. We are of the opinion that consideration of balance of convenience does not also favour the appellant/petitioner. 11. It was brought to our notice by the learned counsel for the appellant/petitioner that an attempt to harmoniously settle the matter would be advantageous. We readily accepted the suggestion and referred the parties for mediation. We note that the mediation has not been successful. It is not for us to delve deeper into the causes which led to the failure of mediation. The learned counsel for the appellant/petitioner does , of course, contend that no meaningful attempt was made by respondents 1 to 5 to settle the dispute amicably. 12. Be that as it may, we are of the opinion that the Arb. Appeal No.16 of 2011 -: 9 :- impugned order does not warrant any interference on well established three pronged test of prima facie case, balance of convenience and irreparable injury. We are of the opinion that the impugned order does not call for interference. The challenge fails. 13. This appeal is, in these circumstances, dismissed. No costs. Sd/- R. BASANT (Judge) Sd/- K. SURENDRA MOHAN (Judge) Nan/ HO //true copy// P.S. to Judge Arb. Appeal No.16 of 2011 -: 10 :-