Case: Srinivas &amp; Company Vs. Inden Biselers by their Partners

3. The appellants case was as follows: There was on 14 November, 1950 an agreement between the appellant and the respondent that whatever diesel engines were imported by the respondent under the licence granted to the respondent by virtue of the appellant surrendering their certificate for after sales service of diesel engines would be distributed only through the agency of the appellant. The respondent was included in the approved list of importers. The respondent was granted licence to import oil engines, up to certain values. The respondent was granted in the month of May, 1951 what is called the "Blanket Licence" permitting the importation of diesel oil engines unrestricted both as regards quantities as well as categories or brands or makes of engines and of country of origin.4. The respondent is said to have suppressed from the appellant the fact of having been granted a blanket licence for appropriating profits and advantages derived from the same. The respondent thus committed breach of agreement by depriving the appellant of distribution of 317 diesel oil engines of the total value of Rs. 6 lacs imported by the respondent under the blanket licence between the months of May, 1951 and June, 1953. By reason of breach of agreement dated 14 November, 1950 the appellant was deprived of the earning of profits. The alternative case of the appellant was that the respondent was bound to pay to the appellant adequate and reasonable compensation for the benefit that the respondent derived and enjoyed by reason of the surrender of thecertificate which enabled the respondent to be included in the approved list of importers and to be granted a blanket licence.5. The respondent denied the agreement alleged by the appellant. The respondent stated that the only agreement between the appellant and the respondent related to schluter engines. The respondent particularly denied that there was any agreement to sell other brands of diesel engines through the appellant.6. The principal question which arose at the trial was whether the respondent agreed to distribute and sell diesel oil engines through the appellant in consideration of the appellant surrendering their servicing certificate to the respondent and secondly whether the respondent was liable to compensate the appellant. The High Court held that there was no agreement in or about the month of November, 1950 whereunder the respondent agreed to give sole distributorship to the appellants firm of all oil engines which the respondent would be able to import under licence to be obtained by coming into the approved list of importers.The appellants case was as follows: There was on 14 November, 1950 an agreement between the appellant and the respondent that whatever diesel engines were imported by the respondent under the licence granted to the respondent by virtue of the appellant surrendering their certificate for after sales service of diesel engines would be distributed only through the agency of the appellant. The respondent was included in the approved list of importers. The respondent was granted licence to import oil engines, up to certain values. The respondent was granted in the month of May, 1951 what is called the "Blanket Licence" permitting the importation of diesel oil engines unrestricted both as regards quantities as well as categories or brands or makes of engines and of country of origin.4. The respondent is said to have suppressed from the appellant the fact of having been granted a blanket licence for appropriating profits and advantages derived from the same. The respondent thus committed breach of agreement by depriving the appellant of distribution of 317 diesel oil engines of the total value of Rs. 6 lacs imported by the respondent under the blanket licence between the months of May, 1951 and June, 1953. By reason of breach of agreement dated 14 November, 1950 the appellant was deprived of the earning of profits. The alternative case of the appellant was that the respondent was bound to pay to the appellant adequate and reasonable compensation for the benefit that the respondent derived and enjoyed by reason of the surrender of thecertificate which enabled the respondent to be included in the approved list of importers and to be granted a blanket licence.5. The respondent denied the agreement alleged by the appellant. The respondent stated that the only agreement between the appellant and the respondent related to schluter engines. The respondent particularly denied that there was any agreement to sell other brands of diesel engines through the appellant.6. The principal question which arose at the trial was whether the respondent agreed to distribute and sell diesel oil engines through the appellant in consideration of the appellant surrendering their servicing certificate to the respondent and secondly whether the respondent was liable to compensate the appellant. The High Court held that there was no agreement in or about the month of November, 1950 whereunder the respondent agreed to give sole distributorship to the appellants firm of all oil engines which the respondent would be able to import under licence to be obtained by coming into the approved list of importers.

Court's reasoning:
13. The appellant alleged an agreement whereby the respondent appointed the appellant distributor of all diesel oil engines imported by the respondent. The letter dated 26 December, 1950 totally nullifies the appellants case. The appellant was appointed the sole distributor of schluter oil engines for a period of two years. The High Court rightly noticed the distinction between the appointment of the appellant as the sole distributor for two years and the distribution and sale of diesel oil engines by the appellant prior to the said appointment. The trial court fell into the error of considering the letter Ex.as a mere surplusage. The High Court correctly cleared that confusion caused by the trial court The entire correspondence also indicates that the respondent wrote to the Government that the appellant maintained an after sales servicing organisation in respect of diesel oil engines imported by the respondent and sold through the appellant. The appellant was not in a position to be in the list of approved importers because the appellant was neither an established importer nor the sole representative of a foreign manufacturer of diesel oil engines. The respondent on the other hand, filled both the capacities and sent to the Government the special contract of agency between the respondent and the German manufacturers of schluter oil engines appointing the respondent as the sole agent for import and sale of schluter oil engines in South India., The appellant was not granted a certificate at the beginning because the appellant was not an importer. The appellant procured the orders for sale and all such orders had to be executed through the import of diesel oil engines by the respondent. That is how the appellant and the respondent dealt with each other prior to the appointment of the appellant as the sole distributor by the respondent in the month of December, 1950. The appellant after refusal of grant of certificate again approached the Government and in no uncertain terms stated that the respondent was the importer and the certificate was therefore required by the respondent.14. The documents established beyond any measure of doubt that the appellant was appointed the sole distributor of schluter on engines for a period of two years. In case of disputed oral version it is safer to rely on documents. That is more so in the case of contemporaneous documents considered in the light of rival contention.. If the appointment of the appellant as distributor of schluter engines had not been the correct state of affairs between the parties the appellant would have been the first to cavil at the appointment of sole distributor for schluter oil engines for two years. The significant silence of the appellant in that behalf strengthens the respondents case. It is equally noticeable that the appellant throughout the years when the respondent sold other oil engines in the area never raised any objection or preferred any claim.15. The correspondence between the parties in the month of November, 1950 and the appointment of the appellant as the sole distributor of schluter engines in the month of December, 1950 was at the time when the respondent was applying for only schluter oil engines. The blanket licence that was obtained by the respondent in the month of May, 1951 was pursuant to a new import policy. The respondent by letter dated 30 April 1951 (Exapplied to the Deputy Chief Controller of Imports for the issue of a blanket licence in accordance with I.T. C. notification No. 81 (P/N) 51. That refers to the import trade control notification of the year 1951. The notification is ExhibitIt is manifest that the blanket licence was not in the contemplation of parties in the months of November and December, 1950. It was a new policy of the Government. The respondent of its own applied for the blanket licence. The appellant had no concern with it.16. The alternative case of the appellant under section 70 of the Contract Act was that the appellant surrendered the certificate and the respondent obtained the benefits thereof and therefore the respondent was liable to compensate the appellant. The appellant was appointed the sole distributor for two years in respect of schluter oil engines. The certificate which the appellant surrendered to the respondent resulted in the appointment of the appellant as the sole distributor for schluter engines. The issue of blanket licence by the Government to the respondent was because of change in import trade policy. The respondent of its own applied for the blanket licence. The grant of the blanket licence was not any act done by the appellant. The respondent did not receive the blanket licence as a benefit from the appellant.