IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 14.10.2011 Coram THE HONOURABLE MRS.JUSTICE R. BANUMATHI AND THE HONOURABLE MS.JUSTICE R. MALA O.S.A.No.300 of 2008 Best Pumps (India) Pvt. Ltd., No.6B, Thadagam Road Coimbatore-641 025 Branch Office No.108/1 Angappa Naicken Street Chennai-600 001. (Cause title accepted vide order of Court dated 24.04.2008, made in M.P.No.1 of 2008) .. Appellant/Defendant Vs. Vasanthy Santhanam Proprietrix M/S.Home Care Agencies, No.28/1 Venkatesa Choudry Street West Tambaram, Chennai-600 045. .. Respondent/Plaintiff PRAYER: Appeal filed under Order XXXVI and Rule 1 of Original Side Rules, read with under clause 15 of Letters Patent Act against the judgment and decree dated 04.06.2007 made in C.S.No.105 of 1998 and to set aside the same. For Appellant : Mr.R.Bharathkumar for Mr. K.Govi Ganesan For Respondent : Mr. Karthik Seshadri JUDGMENT R. MALA, J. This Original Side Appeal has been arising out of the decree and judgment passed in C.S.No.105 of 1998, for granting decree for Rs.1,18,020/- together with interest at the rate of 6% per annum from the date of plaint till the date of realisation with proportionate costs. 2.The gist and essence of the averments in the plaint are as follows: (i)The defendant was marketing Best pump sets and other accessories. The plaintiff had approached the defendant about in the year 1992 and obtained a dealership of Best pump sets and accessories https://hcservices.ecourts.gov.in/hcservices/ marketed by the defendant under the oral arrangement. The plaintiff achieved the target turnover fixed by the defendant earnestly. The defendant was also issuing various other instructions, which the plaintiff was adhering and she had always functioned to the best benefit of the defendant. She had developed a very good market for Best pumps at Tambaram. Subsequently, it was extended to Valasaravakkam in or about beginning of 1993. (ii) For the period 01.04.1997 to 31.03.1998, the defendant's Chennai office with whom the plaintiff was always dealing, by its letter dated 26.04.1997 fixed a turnover of Rs.34.01 lakhs for an eligibility of a turnover discount of 2% and a target of Rs.44.01 lakhs for the eligibility of 3% as turnover discount. Additional discount was also provided for timely payment. The plaintiff achieved the higher turnover of Rs.44.01 lakhs and had lifted stocks from the Chennai branch of the defendant to an extent of Rs.18 lakhs by the beginning of August 1997 (i.e.) within a period of four months. Thereafter, the plaintiff was not given any stocks by the defendant inspite of several requests over telephone. (iii) Subsequently, in the end of September 1997, the plaintiff came to know that the defendant had appointed some dealers for Valasaravakkam, Tambaram and Porur area. Since the plaintiff was not getting stocks, she wrote a letter dated 01.10.1997 pointing out that the defendant had failed to supply stocks to the plaintiff and that the plaintiff would be entitled to an incentive of 3% on the targeted turnover of Rs.44.01 lakhs and called upon the defendant to make the payment. Though the said letter was received and acknowledged by the defendant, no reply was sent. Hence, the plaintiff issued a notice dated 31.10.1997 for claiming damages on breach of contract and apart from the other amounts due from the defendant. The plaintiff had made a total claim of Rs.10.90 lakhs. She also received an interim reply for the above said notice. She received another reply on 29.11.1997 from the Advocate of the defendant with the frivolous allegations. Hence, the plaintiff sent a rejoinder on 07.12.1997 refuting the contentions raised by the defendant and also demanded a further sum of Rs.2 lakhs as damages for loss of reputation on account of issuing illegal circulars to her customers. The defendant sent a further reply on 12.01.1998 with an illegal contention. Since the defendant had committed breach of Agreement of the terms of letter dated 26.04.1997 by non-supply and by appointing other dealers, the plaintiff constrained to file a suit for permanent injunction restraining the defendant in any manner interfering with the business of the plaintiff directly or indirectly including issuance of circulars about contacting the defendant for the requirement of pump sets and claiming Rs.12,90,000/- with interest at the rate of 18% per annum from the date of institution of the suit till date of payment and costs. 3.The pith and substance of averments in the written statement filed by the defendant are as follows: (i)The defendant is a Company engaged exclusively in the distribution of pump sets manufactured by best Group of concerns under their well known brand names such as Best, Gowri, Besto etc. The defendant had made publicity and sales promotion on behalf of https://hcservices.ecourts.gov.in/hcservices/ all the retailers/dealers projecting the brand name of the best Group. The successful marketing of the product is due to the strong after sales service and customer support rendered by the defendant at its own cost. There is no arrangement either oral or written, by which the plaintiff was to function exclusively as a dealer of best pump sets at Tambaram and neighboring areas. At present, there are about 60 dealers who are in operation in and around the city of Madras. The dealers were allowed to sell the pumps at a price adding their margin of profit and also taking into account the suggested customer price prescribed by the defendant. The defendant issued a fresh price list whenever there was a change in price or change in the terms of payment. The defendant never issued any letter of appointment to the plaintiff or anybody else nor entered into any agreement for operating as an exclusive dealer for any part of the city of Madras. The relationship between the defendant and its retail dealers always remain as seller and buyer and that the trade was regulated based on the circulars issued by the defendant on the products and on payment of price. There was no discussion with the defendant regarding the opening of another outlet at Valasaravakkam in or about the beginning of 1993. (ii) The plaintiff in collusion with one V.Janakiraman, the then Branch Manager of the defendant at its Madras Office, who left the employment of the defendant with effect from 31.07.1997, following his difference of opinion with the whole time Director and other Directors of the defendant Company on business practice, with the sinister motive of bolstering the false claim against the defendant had fabricated a document purported to be the minutes of the discussion said to have taken place on 10.01.1993, between the plaintiff's husband and V.Janakiraman. On enquiry, the defendant came to know that the husband of the plaintiff and the wife of the above said Janaki Raman and his relatives were running a partnership business under the name and style of "Renu Pumps and Service". (iii)The averment regarding purchase turnover achieved by the plaintiff for the period 01.04.1997 to 25.08.1997 and the offer made by the defendant for target discount and timely payment discount are true. However, much to the surprise of the Officers of the defendant, the plaintiff stopped purchase of pump sets after 09.08.1997, though the invoice relating to the same was dated 23.08.1997, inspite of repeated telephonic calls from the officials of the defendant. The plaintiff allowed the said Janakiraman to open a new sales outlet by vacating a part of her Valasaravakkam premises for marketing the pump sets promoted by Janakiraman under different brand names, using the same product logo under which Best pumps are being sold for the past many years. (iv) The plaintiff is not entitled to any damages and much less a sum of Rs.12,90,000/- as claimed by the plaintiff. The plaintiff has not incurred any expenses and much less a sum of Rs.5,00,000/- for developing the market for the respondent's pump sets. The plaintiff has not suffered any damages either directly or indirectly because of the stoppage of the business between the plaintiff and the defendant. Hence, the defendant prayed for the dismissal of the suit with exemplary costs. https://hcservices.ecourts.gov.in/hcservices/ 4.The learned single Judge, after considering the averments both in the plaint and the written statement and arguments of both the counsel, framed necessary issues and considering the oral and documentary evidence, dismissed the relief of permanent injunction, since the plaintiff is not pressing the relief and granted decree for a sum of Rs.1,18,020/- together with interest at the rate of 6% per annum from the date of plaint till the date of realisation with proportionate costs, as if the defendant supplied the goods, the plaintiff could achieve the target and she is entitled to 3% of incentive, against which, the present appeal has been preferred by the defendant. 5.Considering the rival submissions made on both sides, the following points for consideration are framed. (i) Whether the respondent/plaintiff is entitled incentive as per Ex.P7? (ii)Whether the decree and judgment passed by the learned single Judge is sustainable? (iii)To what relief, the appellant/defendant is entitled to? 6.Points 1 to 3: The learned counsel for the appellant/defendant would submit that the respondent/plaintiff is not a dealer under the appellant/defendant's Company, the respondent/plaintiff herein had given up the relief of injunction, before the learned single Judge. He would further submit that the evidence of P.W.1 was not considered and the documents under Exs.P3 to P6 were erroneously considered by the learned single Judge. The findings of the learned single Judge that the respondent/plaintiff is a dealer is totally erroneous one. It was further argued that the learned single Judge has failed to appreciate that the respondent has taken advantage of her own mistake and hence, she is not entitled to any relief. He further submitted that the respondent has colluded with Ex-Manager of the appellant/defendant's Company and created the document under Ex.P3, which is a forged and fabricated one. Hence, he prayed to set aside the judgment and decree passed by the learned single Judge granting Rs.1,18,020/- (i.e.) 3% incentive for a turnover of Rs.44.01 lakhs. 7.Refuting the same, the learned counsel for the respondent/plaintiff would submit that the respondent is a dealer and she has achieved the target as prescribed by the appellant/defendant. The averment in para-13 of the plaint was not denied. Since the appellant had not supplied the goods, the respondent was unable to reach the target as prescribed under Ex.P7-scheme of the defendant. So the learned single Judge considered this aspect and arrived at the correct conclusion and granting Rs.1,18,020/- with interest at the rate of 6% per annum (i.e.) incentive amount for the target fixed for Rs.44.01 lakhs. Hence, there is no illegality or irregularity in the judgment passed by the learned single Judge and therefore, he prayed for the dismissal of the appeal. https://hcservices.ecourts.gov.in/hcservices/ 8. Considered the rival submissions made on both sides. 9. Admittedly, the appellant/defendant is marketing the Best pump sets and other accessories. As per the documents under Exs.P3 to P5, which was issued by the appellant/defendant shows that the respondent is a dealer. In the documents under Exs.P3 to P5, it was specifically mentioned as follows: "(a). You can notice that the Dealers discount rate for all the pump sets (Jet, Monobloc and Submersible) are 30% and List price". In clause-3, it was stated as follows: ".. .. (c).Terms and conditions and Dealer Discount". In clause-4, it was specifically mentioned as follows: "4.We request you to sign and return one copy of the Terms and Conditions for our records". The above documents clearly shows that the respondent/ plaintiff was a dealer under the appellant/defendant's Company. 10. Furthermore, the documents under Exs.P8 to P11-the circulars issued by the appellant/defendant on 04.09.1997 and 08.09.1997 respectively, in which, it was stated that the respondent/plaintiff is a dealer and since she has not selling the best pump sets and disposing of the other brand pump sets, the appellant's Company has appointed new dealers for Valasaravakkam and Tambaram area. 11. In Ex.P12-letter of defendant, dated 10.11.1997, it was specifically mentioned as follows: "We understand from our records that you have purchased our "BEST" pump sets from M/S. Home Care Agencies, Chennai. We would like to inform you that the dealership for the above firm has been cancelled. For service, spare parts or new pump set requirements, we request you to contact our Branch Office directly". As per the documents under Exs.P3 to P12, it have clearly proved that the respondent/plaintiff was a dealer under the appellant/defendant's Company. 12. It is pertinent to consider the arguments advanced by the learned counsel appearing for the appellant/defendant that since Janakiraman, who was the Ex-Manager of the appellant's Company had colluded with the respondent/plaintiff and sold the products, which was manufactured by his partnership firm. To prove the same, the appellant has filed the documents under Exs.D3 to D5. Ex.D3 is an Advertisement for Renu Brand Pumps and Ex.D4 is a pamphlet communicated to one Chandrababu in respect of Renu Brand pump sets. In Ex.D4, the said Janakiraman was signed as 'Sales Consultant'. Ex.D5 is a Guarantee Card, in which, "Best pump sets are guaranteed for a period of one year from the date of purchase" and the https://hcservices.ecourts.gov.in/hcservices/ Manufacturer was mentioned as "Best Engineering Company" and the Distributor was mentioned as "Home Care Agencies". But these documents are not relevant, because as per the document under Ex.P13, in which, the respondent/plaintiff had issued a notice on 31.10.1997 and after that, the appellant/defendant sent a notice under Ex.P12 on 10.11.1997 stating that her dealership was cancelled. In view of these documents, the learned single Judge is correct in holding that the respondent is a dealer. 13. Admittedly, Ex.P7-circular in respect of scheme of the defendant was issued on 26.04.1997, in which, the target turnover has been fixed and the dealers are entitled for 3% of discount on the turnover of Rs.44.01 lakhs. 14. At this juncture, it is appropriate to consider the arguments advanced by the learned counsel for the respondent/plaintiff that if the appellant/defendant would have supplied the goods, she would have reached the target as prescribed by the appellant/defendant under Ex.P7. But, admittedly, the appellant/defendant had not supplied the same. Therefore, on 01.10.1997, the respondent/plaintiff had issued a notice claiming Rs.1,18,800/-. The appellant sent a reply notice on 10.11.1997, which was marked as Ex.P18 stating that they sought for time to get proper instruction from its whole time Director. Reply notice by the appellant/defendant was marked as Ex.P14 and rejoinder by the respondent/plaintiff was marked as Ex.P15. 15.In Ex.P14-the reply notice sent by the appellant/defendant, it was stated as follows: ".. .. There is no compulsion on the part of my client to send pump sets, according to the orders of your client. The supplies depend upon availability and other circumstances like the demand in other area. My client is always entitled to appoint different dealers for different areas. It is also open to my client to stop transacting with any dealer. The relationship between the dealers and my client has always been that of a buyer and seller, with some incentives, which may be paid, depending on their performance. The claim made by your client under the letter dated 01.10.1997 is not sustainable. .. .." The above reply notice shows that the defendant had stopped the supply of goods to the respondent, unilaterally. 16. At this juncture, it is appropriate to consider the paragraph-13 of the plaint, in which, the turnover achieved by the respondent/plaintiff is stated as follows: Period Turnover in (Rs.) 1992-93 5,00,989/- 1993-94 15,77,589/- 1994-95 18,14,780/- https://hcservices.ecourts.gov.in/hcservices/ Period Turnover in (Rs.) 1995-96 28,17,460/- 1996-97 40,55,934/- April 1997 - August 1997 17,53,353/- The above turnover shows that if the appellant/defendant would have supplied the goods, the respondent/plaintiff would have reached the target turnover and would have entitled for an incentive. 17. It is pertinent to note that the appellant/defendant had cancelled the dealership and failed to supply the goods from August 1997. Therefore, the respondent herein had issued a notice under Ex.P17 claiming Rs.1,18,800/- (i.e.) 3% incentive for the target is to be achieved to an extent of Rs.44.01 lakhs. The learned single Judge by considering the decision relied upon by the plaintiff reported in AIR (38) 1951 SC 144 (Pannalal Jankidas, a firm v. Mohanlal and another), granted incentive to the respondent and since the appellant/defendant's Company have committed the breach of contract, they are liable to pay the compensation. Averments in Para- 13 of the plaint has proved that the respondent herein has reached the target turnover and that factum was not denied by the appellant neither in their written statement nor in their oral evidence. After issuance of Ex.P7-circular in respect of the scheme, the appellant/defendant herein has committed a breach of contract in non- supplying the goods. Hence the respondent herein has sent a letter under Ex.P17 on 01.10.1997 claiming incentive of 3% for Rs.44.01 lakhs. But she has not received any reply after issuance of legal notice under Ex.P13, she filed a suit. The learned single Judge after considering the aspect that the appellant/defendant herein has committed a breach of contract and observing that if the defendant/appellant had supplied the goods, certainly the respondent would have reached the target turnover of Rs.44.01 lakhs and she would have entitled to Rs.1,18,020/-. The learned single Judge considered all the aspects in proper perspective and came to the correct conclusion and hence, we do not find any reason warranting interference with the judgment and decree passed by the learned single Judge. Points 1 to 3 are answered accordingly. 18. In the result, confirming the judgment and decree dated 04.06.2007 made in C.S.No.105 of 1998, the Original Side Appeal is dismissed with costs. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar kj https://hcservices.ecourts.gov.in/hcservices/ To The Sub Assistant Registrar Original Side High Court, Madras. 2 cc to Mr.H.Karthik Seshadri, Advocate, Sr.No.63151 1 cc to Mr.R.Bharath Kumar, Advocate, Sr.No.63315 Judgment in O.S.A.No.300 of 2008 PKB {CO} TP/10.11.2011. https://hcservices.ecourts.gov.in/hcservices/