' SYED HAMID ALI SHAH, J.---This single order will dispose of F.A.O. No,169 of 2005 titled " Pak China Chemicals v. Department of Plant Protection etc." and F.A.O No,184 of 2005 titled "Habei Vian Bio Chemical Co. Ltd. v. Pak China Chemicals Ltd. And another" as both these appeals have been preferred against the same order. The appellant in F.A.O. No,169 shall hereinafter be referred to as the appellant, whereas respondent No,1 in F.A.O. No,169 of 2005 shall be hereinafter be referred to respondent No,1 and appellant in F.A.O. No,184 of 2005, who is respondent No,2 in F.A.O. No,169 of 2005 shall hereinafter be referred to respondent No,2, for the purposes of disposal of these appeals.
2. Briefly stated facts of the case for the purpose of decision of these appeals are that appellant deals in various pesticides. It agreed to import Emamectin Benzoate in Pakistan and sell the same being sole agent of respondent No,2, with its brand name 'Timer". Respondent No,2, subject to issuance of licence by respondent No,1, exports its chemical products/ pesticides from China to Pakistan. The appellant and respondent No,2 entered into an agreement wherein as per its clause 7, the exclusive rights were conferred upon the appellant to sell the product of respondent No,2 in Pakistan, being its sole agent. It was further agreed that respondent No,2 shall not sell its product, in any shape, to any other importer in Pakistan and the NOC for the registration of another importer regarding the registration before respondent No,1, was agreed to be withdrawn. Agreement is admitted by both the parties, which is for a period till June, 2005. The registration certificate issued by respondent No,1, has also expired on 30-6-2005. Respondent No,2 after signing the agreement as per agreed terms, issued letter to respondent No,1 directing therein the respondent No,1 to stop and cancel the registration process of the other applicants who intended to import Emamectin Benzoate through respondent No,2. Respondent No,1 subsequently started the process of registration of other importers for the supply of Emamectin Benzoate, which gave cause to the appellant to file a suit for specific performance and permanent injunction on 31-5-2005.
Respondent No,2 contested the suit, controverted the assertions made in the plaint and raised various preliminary objections, including the objection as to the jurisdiction of the Court.
3. The plaintiff along with the suit filed an application under Order XXXIX, rules 1 and 2, C.P.C. For the grant of temporary injunction. Learned trial Court vide order dated 1-6-2005 granted the appellant interim injunction, restraining respondent No,1 front issuing registration certificate to any other importer. The application was subsequently dismissed vide order dated 16-6-2005. The respondent No,2 filed an application under section 34 of the Arbitration Act and took serious exceptions as to the jurisdiction of the Court. Learned trial Court while passing the impugned order dismissed the application of respondent No,2 moved under section 34 of the Arbitration Act and also assumed the jurisdiction while placing reliance on section 20-C of C.P.C. And dictum of law laid down in PLD 2003 Karachi 382. Learned Court, refused the relief of temporary injunction to the appellant considering clause 7 of the agreement oppose to public policy as contemplated in section 23 of the Contract Act, 1872. The appellant has challenged in appeal the dismissal of his application while respondent No,2 has impugned the conclusion of the Court qua the assumption of jurisdiction and dismissal of application moved under section 34 of the Arbitration Act.
4. Learned counsel for the appellant has contended that the learned trial Court declined the relief of injunction solely on the ground that the agreement under reference, specially it's clause (7) is against the public policy and that the contract is void under section 23 of the Contract Act. He added that the question whether a contract or its performance is against public policy, is a mixed question of law and fact and is required to be decided by allowing the parties to lead evidence after the issue is framed. He in support of his arguments referred to "Sultan Textile Mills Ltd. v.
Muhammad Yousaf Shami" PLD 1972 Karachi 226. Case of "Messrs Gujrat Bottling Company Limited v. Coca Cola Ltd." AIR 1995 SC 2375 was relied upon to contend that the agreements granting sole distribution rights in present commercial world contain the restrictive clause and exclusive right is a normal condition which cannot be termed as an agreement in restraint of trade for the purpose of section 27 of the Contract Act. Such a condition restricting the right of the franchisee to deal with competing goods is for facilitating the distribution of the goods of the franchiser and it cannot be regarded as restraint of trade. Learned counsel while placing reliance on the case of "Mung Sein Htin v. Cher Pan Ngaw" AIR 1925 Rangoon 275 has contend that it was for respondent No,1 to prove how the contract was against the public policy. It was next contended by the learned counsel for the appellant that the appellant was the sole agent and agency cannot be revoked or terminated unless a notice is issued and provisions of section 202 of the Contract Act are complied with. He in support of his contention referred to the case of "Muhammad Aref Efendi v. Egypt Air PLD 1980 SC
588. He has referred to the case of "Messrs Universal Trading Corporation (Pvt.) Ltd. v. 'Messrs Beechan Group PLC and another" 1994 CLC 726 to contend that the appellant is entitled to the grant of temporary injunction if the terms of agreement were breached and agency agreement was terminated, without any lawful justification. He lastly contended that the appellant has a prima facie case and while referring to "Pak Shaheen Containers Service v. Trustees of Post of Karachi PLD 2001 Karachi 30 and Liaqat National Hospital Association v. Province of Sindh" PLD 2002 Karachi 359, has submitted that Government functionaries are expected to act fairly and justly and breach of contract calls for interference by Court, entitles the appellant for the relief of temporary injunction.
5. Learned counsel for respondent No,1, on the other hand, has referred to Article 129(e) of the Qanun-e-Shahadat Order, 1984 to contend that presumption of truth is attached to official acts and to rebut such presumption the appellant was required under law to prove mala fide with definite proof. He then contended that the issuance of licence by respondent No,1 is privilege and not a right. Adds that the appellant has no right to interfere in the issuance of licence to other importers, and in this respect relied upon the case of "Zamir Ahmad Khan v. Government of Pakistan" 1978 SCMR 327. He has then referred to section 56(d) of Specific Relief Act (I of 1887) and contended that the injunction against the Government functionaries is barred. Learned counsel referred to the cases of "Shahzada Muhammad Umar Baig v. Sultan Mehmood Khan" PLD 1970 SC 139 and PLD 1981 SC 137 to contend that injunctive order cannot be issued as a matter of course. He has lastly contended that the interim relief in the form of ultimate relief, cannot be granted and in support of his contention placed reliance on "Sheikh Irshad Ahmad v. English Leasing Ltd." 2004 YLR 2700 and "United Bank Ltd. v. Ahmad Akhtar" 1998 SCMR 68. He concluded his arguments with the submission that the time for which the contract was arrived at between the parties has since elapsed, therefore, the interim relief cannot be granted to the appellant.
6. Learned counsel for respondent No,2 has supported the impugned order and stated that the agreement for sale of pesticide (Emamectin Benzoate) is subject to a valid licence from respondent No,
1. The licence of the appellant has since elapsed and was not renewed, therefore, the appellant cannot import Emamectin Benzoate without a valid licence. He has then contended that Emamectin Benzoate is an important pesticide for pests' control in cotton crop and a monopoly in this respect will adversely affect the rights and interest of agriculture in the country.
The restraint clause in the agreement results in discouraging healthy competition between the importers and as such it is against the public policy. He argued vehemently that the agreement between the appellant and respondent No,2 is for a specific time and for a specific quantity of Chemical for which the letter of credit has already been established and the quantity of chemical, for which the agreement was arrived at, has already been supplied. The agreement has elapsed on 30-6-2005 and no part of agreement remains capable of being performed. He in support of this contention has placed reliance on the case of "Muhammad Ashiq v. Government of Sindh" 2002 SCMR 307. He has further argued that the Courts in Pakistan have no jurisdiction as the parties have agreed for arbitration by an arbitrator outside China and Pakistan, which shows that the suit can be tried by a Court situated in a country other than these two countries. He in support of his contention has relied upon "Mahtab Ahmed v. Meer Shakeel-ur-Rehman" 2004 MLD 662; "Messrs EFU General Insurance v. Faheem-ul-Haq" 1997 CLC 1441. Learned counsel has stated that the learned trial Court has erroneously assumed the jurisdiction. The learned trial Court has no jurisdiction to entertain the suit.
7. Heard learned counsel for the parties at length and examined the record.
8. There is no cavil with the proposition that a sole distribution/agent is appointed to deal with the goods of principal and in such agreement a condition is imposed on principal not to sell the goods through other agents and at the same time, on the agent not to deal with competing goods. When such condition is not wholly one sided and when it operates during the currency of the period of contract, it cannot be regarded as one in restraint of trade. Global trade, in growing business, is mostly based on Franchise Agreements and sole distribution agreements. Incorporation of a restraint clause in such agreement cannot be said to be hit by doctrine of restraint of trade, provided it is reasonable, on equal bargaining strength, is not unilateral and operates during the currency of the agreement.
9. The original agreement dated 20-4-2005 is an agreement whereby the appellant was appointed as sole agent of respondent No,2. Perusal of the agreement reveals that the agreement was for sale of specific quantity of chemical and was for a specific period i,e, uptill June, 2005. The appellant was entitled to sell the product of respondent No,2 being sole agent in the country, to the exclusion of other persons/importers, within the period of validity of the agreement. The appellant after the lapse of the period of the agreement has no right to claim the privilege of sole agent. The agency stood terminated after the prescribed period.
10. There is no cavil with the proposition that once a person is appointed as a sole agent he has the right to act in that capacity to the exclusion of other persons. The agency can only be terminated either by serving upon the other party a notice or as per express stipulation of the contract. Section 201 of the Contract Act, 1872 is reproduced for ready reference:-- "An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of the agency; or by either the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors."
The agreement between the appellant and respondent No,2 was for a fixed term, the expiration of the term has put an end to the agency. Additionally the parties entered into an agreement for a specific quantity of Emamectin Benzoate, which quantity has already been imported by the appellant. Thus the business of the agency being accomplished terminates the agency between the appellant and respondent No,2. The appellant in these circumstances has failed to establish a prima facie case in his favour.
11. Respondent No,2 in its Appeal No,184 has stressed that the proceedings in the suit are liable to be stayed and the matter has to be referred to the arbitration. This objection has lost its force as respondent No,2 has itself participated in the proceedings and has filed the written statement.
12. Now I will revert back to the question of jurisdiction. The agreement between the appellant and respondent No,2 was arrived at in Pakistan. The import of Emamectin Benzoate is governed under the provisions of Agricultural Pesticides Ordinance, 1971 (II of 1971). The letter of credit was established in Pakistan. The arguments of learned counsel for respondent No,2 that the parties have since agreed for arbitration outside Pakistan and China, therefore, Courts in Pakistan have no jurisdiction, have no force. The parties, by mutual consent, can neither confer jurisdiction upon a Court nor can take away the same, if so vested. The Court in whose jurisdiction the cause of action has arisen, has the jurisdiction to entertain the suit, irrespective of the residence of the defendant.
This question has already been settled in the case of "T. Zubair Ltd. v. Judge Banking Court Lahore"
2000 CLC 1405. Learned trial Court has rightly decided the question of jurisdiction.
13. For the foregoing reasons both these appeals are dismissed and the impugned order, wherein the tempo nary injunction was declined to the appellant is upheld, without any order as to costs.