1975 (1) TMI 94 - HC - Indian Laws

Agency Termination: No Breach, No Notice. Award Overturned, Costs Denied.

M/s Bright Brothers (P) Ltd., Bombay Versus J.K. Sayani,

The trial court initially awarded the respondent a sum of Rs. 8,817.59 for breach of contract and lack of reasonable notice upon termination of the ... - Issues Involved:1. Whether the plaintiff is the sole selling agent for the plastic goods manufactured by the defendants or merely a stockist.2. The terms and conditions of the jural relationship between the plaintiff and the defendants.3. The validity and binding nature of the termination of the agency of the plaintiff by the defendants.4. The truth, validity, and binding nature of the settlement pleaded by the defendants.5. Whether the termination was in breach of the contract and the settlement pleaded is not true and valid.6. The relief to which the plaintiff is entitled.Issue-wise Detailed Analysis:1. Sole Selling Agent vs. Stockist:The trial court concluded that the relationship between the parties was that of principal and agent, with the respondent acting as the sole selling agent for the appellants' goods in the specified areas. The court rejected the appellants' contention that the respondent was merely a stockist, based on the evidence presented.2. Terms and Conditions of the Jural Relationship:The court found that the terms of the relationship were not explicitly documented but were inferred from the conduct and correspondence between the parties. The respondent was entitled to a commission of 6 1/4 percent on orders executed, with additional commissions under certain conditions. This arrangement was modified by a letter dated February 27, 1964, which altered the commission structure but did not change the nature of the relationship.3. Validity of Termination:The trial court held that the termination of the agency without reasonable notice was invalid under Section 206 of the Indian Contract Act, 1872. The court determined that a reasonable notice period, in this case, would be four months, and awarded the respondent compensation for this period.4. Settlement Pleaded by Defendants:The trial court found no evidence to support the settlement pleaded by the defendants in their written statement. The court concluded that there was no valid and binding settlement between the parties.5. Breach of Contract and Validity of Termination:The court held that the termination of the agency without reasonable notice constituted a breach of contract. The respondent was entitled to damages for the lack of reasonable notice, as determined by the court.6. Relief Entitlement:The trial court awarded the respondent a total of Rs. 22,250, which included Rs. 16,000 for the reasonable notice period and Rs. 6,250 for commissions on orders booked before termination but executed later. After deducting the amount owed by the respondent to the appellants, the court decreed a sum of Rs. 8,817.59 in favor of the respondent.Appeal Consideration:The appellants contested the award of Rs. 16,000 for the reasonable notice period, arguing that under the Indian Contract Act, 1872, the respondent was not entitled to such notice. The court examined Sections 205 and 206 of the Act, which deal with the termination of agency and the requirement of reasonable notice. The court concluded that Section 206 applies only to agencies with a fixed term, which was not the case here. Therefore, the respondent was not entitled to a reasonable notice period.Final Judgment:The appeal was allowed, and the trial court's judgment awarding Rs. 8,817.59 to the respondent was set aside. The court held that the respondent was not entitled to any decree in the present suit, given that there was no requirement for reasonable notice under the circumstances. No costs were awarded due to the nature of the legal question involved.