Principal-to-principal procurement arrangement upheld; writ interference refused where contract evidence supported the tribunal's tax finding.

The procurement agreement was construed as creating a principal-to-principal relationship, because the petitioner purchased goods on its own account, used its own funds, retained discretion over supplier and price, and bore responsibility for handling and delivery until handover; the label of "procurement agent" was therefore inconclusive. The writ court's power of interference under Article 226 was held to be limited, and no intervention was justified where the contract and evidence supported more than one view and there was no error of law, perversity, or absence of evidence. The challenge based on Rule 26(6)(b) of the Tamil Nadu General Sales Tax Rules also failed, as compliance had been found on appeal.

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Issues: Whether, on a proper construction of the procurement agreement, the relationship between the petitioner and Universal Radiators was one of principal to principal or principal and agent, and whether the writ court should interfere with the Special Tribunal's finding.

Analysis: The agreement was examined as a whole, and its operative clauses showed that the petitioner was authorised to procure goods using its own funds, was free to deal with other parties, had discretion regarding purchase, seller and price, and bore responsibility for handling, storage, transport and delivery until the goods were handed over. The principal was to reimburse procurement and incidental expenses only after delivery, and the petitioner was entitled to remuneration, all of which indicated that the petitioner dealt on its own account and not merely as an agent acting for and on behalf of the principal. The mere description of the petitioner as a procurement agent was held to be inconclusive. The court also held that the writ jurisdiction under Article 226 is limited and that, where more than one view is possible on the evidence and contract, interference is not warranted unless there is an error of law, perversity, or absence of evidence. The objection based on non-compliance with Rule 26(6)(b) of the Tamil Nadu General Sales Tax Rules was also rejected, as the appellate finding was that the rule had been complied with and no material justified a contrary view.

Conclusion: The relationship was held to be principal to principal, the petitioner was not treated as an agent of Universal Radiators, and the Special Tribunal's order upholding the sales tax assessment was not interfered with.

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