' This judgment shall dispose of two Civil Revision Petitions i,e, Civil Revision No, 1111/82 and 1175/82 which are directed against one and the same judgment viz, judgment dated 21st July, 1982 passed by learned Civil Judge 1st Class, Lahore, whereby he partly accepted the petition of National Trading Company (NTC) Ltd., Lahore, respondent in Civil Revision No, 1111/82 and petitioner in Civil Revision No, 1175/82 for the grant of ad interim injunction and partly rejected the said application.
2. The opposite party viz. Pakistan Paper Corporation Ltd., Peshawar (petitioner in Civil Revision No, 1111/82) have called into question the aforesaid order of the learned Civil Judge to the extent he has partly accepted the application for interim injunction of National Trading Company. Similarly, the National Trading Company through Civil Revision No, 1175/82 has assailed the order dated 21st July, 1982 of the learned Civil Judge in so far he has partly rejected the application of that Company for the grant of temporary injunction.
3. The relevant facts briefly stated are that vide distributorship agreement dated 28th February, 1981 Pakistan Paper Corporation Ltd. (hereinafter referred to as P P C) appointed National Trading Company Ltd. (hereinafter referred to as N T C) to hold the distributionship rights for the products of the former for the city of Lahore. This appointment was for a period of three years. In the month of February, 1982, P P C declined to supply its products to the N T C inasmuch as on 28th February, 1982 P P C received a letter from the N T C along with a Bank draft of Rs, 3,00,000 (Rs, three lacs) asking for the supply of papers but the P P C returned the draft on 28th February, 1982 alongwith a letter intimating that file of N T C was closed and no supply would be made to that party. P P C claims to have acted in pursuance of clause 1 of the distributorship agreement. The said clause reads : "P P C hereby appoints N T C to hold distributionship rights for its products for city of Lahore and N T C hereby accepts such appointment. This appointment shall be for a period of 3 years from the date of this agreement which may be terminated by a notice of one month by either party."
' Thereafter legal notices were exchanged between the parties. Notice dated 30th March, 1982 was received by P P C from N T C. Reply was sent on 13th April, 1982. Again N T C sent a notice dated 22nd April, 1982 and P P C sent reply on 30th May, 1982.
' Ultimately on 30th June, 1982 N T C filed an application under section 20 of the Arbitration Act pressing into service clause 13 of the distributorship agreement whereby it was provided that all disputes arising under or in connection with the agreement would be referred to for arbitration in accordance with the provisions of the Arbitration Act, 1940 to the sole arbitrator to be agreed upon by the parties. N T C thus prayed that P P C be directed to file the arbitration agreement in the Court and that the dispute inter se the parties be referred for arbitration to a sole arbitrator to be appointed by the Court in accordance with the distributorship agreement. Alongwith this application N T C filed an application under section 41 of the Arbitration Act of 1940 and Order XXXIX, rules 1 and 2 read with section 151, C P C requesting that during the pendency of the proceedings under section 20 of the Arbitration Act P P C might be restrained from committing the breach of agreement dated 28th February, 1981 in any manner whatsoever and more particularly the P P C be restrained from supplying the products to any other person within the areas of the distribution ship rights of which vests with the petitioner except as provided by the agreement and from withholding the supplies of the petitioner company. This application for interim relief was vehemently opposed by the P P C. The learned Court below, however, after hearing the parties passed an order dated 21st July, 1982 which has been impugned through the under consideration two Civil Revision Petitions. The learned lower Court restrained P P C from withholding the supplies of its products to the petitioner company till final adjudication of the petition under section 20 of the Arbitration Act but declined the prayer of N T C so far it sought P P C to be restrained from supplying its products to any other company.
5. It has been contended on behalf of the P P C that it has duly terminated the appointment of N T C in accordance with clause (1) of the distributorship agreement with effect from 28th February, 1982 and therefore, N T C had no prima facie case for the grant of temporary injunction. It is further urged that through the impugned order whereby P P C has been directed to continue supply of its products to N T C a mandatory injunction in fact has been passed against P P C which is not warranted in any manner. It is also claimed on behalf of P P C that from the point of view of balance of convenience and irreparable loss, N T C has no case for the grant of temporary injunction.
6. In regard to question of prima facie case, it has been argued on behalf of P P C that through distributorship agreement dated 28th February, 1983 no relationship of principal and agent came into being between the parties and their status by virtue of the said agreement was that of a seller and buyer which could lawfully come to an end by just stoppage of supply of goods by the seller to the buyer or refusal by seller to sell its goods to the buyer. Such stoppage of supply or refusal to sell amounted to notice as contemplated by the distributorship agreement. The contention of NTC, on the other hand, is that their relationship was that of principal and agent which could not be brought to an end in the manner in which PPC has acted and that even no notice with regard to termination of appointment of the agency has ever been given by PPC to NTC. Reliance on behalf of PPC has been placed on Mott Lal Channoo Lal Vaish v. Golden Tobacco Co., Hope Prudhommne & Co. v. Hamel & Harby Ltd., Garnesh Export & Import Co. v. Mahadeo La! Nathmal and M Is. Caltex Oil (Pakistan) Ltd., Karachi v. Sheikh Rehan-ud-Din. The ratio in all these cases is that an agent is a1 2 3 4 person employed to do any act for another or to represent another in dealing with third person but where he purchases products from the producer and sells the same to the customer at his own price or on a price fixed by the producer, he is not an agent and Principal/Producer his relationship with the principal/producer is that of a seller and purchaser.
7. NTC, on the other hand, placed reliance on Province of East Pakistan v. MI s M. Irfan Khan & Co.; Kalyan Ji Qunwar Ji v. Tirka Ram Sheolal and others; Pakistan Industrial Development Corporation v. Aziz Qureshi and MI s. Ameeji Valeeji & Sons v. M/s. American President Lines Ltd.. These authorities provided guide line as to under what circumstances a contract is that of principal and agent and when it is the simple contract of sale and purchase as contemplated by the Sales of Goods Act.
8. From the critical analysis of the aforementioned judicial precedents it would appear to be that basic ingredients of contract of agency are :
(i) Agent has a power on behalf of the principal to deal with third persons so as to bind the principal ;
(ii) Subject-matter of the agency has to be dealt with as the property of A the principal and not of the agent ;
(iii) The agents acts as intermediary for consideration ; and
(iv) The liability of the agent is always to account for the sale-proceeds to the principal.
9. In the under consideration agreement of distributorship between PPC and NTC, only in certain cases commission is payable by P P C to N T C. Otherwise N T C pays the price to P P C of the goods supplied to it by the latter and then dispose of the goods at the fixed price to the consumers. P. P. C.
Under the agreement has also made N T C liable to intimate P.P.C. About the details of the sales.
10. For the disposal of an application for temporary injunction it is neither proper nor desirable to record positive findings on the issue as to whether the status of N.T.C. Vis-a-vis P P C is that of a mere buyer or of an agent. As this is the most crucial issue touching the merits of the main application under section 20 of the Arbitration Act, I, therefore, deem it appropriate not to record findings on this question for the disposal of the under consideration Revision Petitions which are relatable only to the grant of temporary injunction. Suffice it would be to say that N T C has at least a fair arguable case for determination that if distributorship agreement between the parties is an agreement of agency or of sale of goods ? If the petitioner has an arguable case it has to be assumed according to the established principles of justice that he has a prima facie case for the grant of temporary injunction.
11. Viewing from another angle, N T C has a prima facie case for the maintenance of status quo inasmuch as that according to clause(1) of the distributorship agreement, the appointment/dealership of N T C could be terminated by one month notice. Admittedly, no express notice has been given by PPC to NTC intimating that the former has terminated the appointment/dealership of the latter in accordance with the provisions of clause
(1) of the distributorship agreement with effect from a date falling a month after the service of the notice. The PPC claims to have terminated the appointment/dealership by stopping the supply of the goods. It has to be seen as to whether P P C could validly terminate the dealership of N T C in this manner and would it amount to termination under clause (1) of the distributorship agreement.
It is also noteworthy that P P C is a public limited company. There is nothing on the records to suggest that Board of Directors of this Company has ever arrived at a decision or has passed a resolution about the termination of dealership of N T C. The letter dated 28th February, 1982 whereby N T C has been intimated by P P C that their file has been closed and they would not be supplied paper, has been signed by Mahfooz Ali Khan, Sales Manager. It has yet to be seen as to whether he was legally competent to terminate the dealership of N T C or not. In Muhammad Aref Effendi v. Egypt Air, the Supreme Court of Pakistan granted temporary injunction in a case in which5 6 7 8 9 substantial questions of law and facts were involved which required careful study and scrutiny after recording of appropriate evidence. The relevant portion of the judgment of the Supreme Court may be reproduced as follows : "We have heard the learned counsel for the parties and from their arguments as also after going through the judgment under appeal, we notice that the case involves substantial questions of law and fact namely :-
(i) under what circumstances a contract of agency of the kind involved in this case could be cancelled or revoked by a principal ;
(ii) whether section 202 of the Contract Act was applicable to the facts of this case and what is true construction and scope of that section.
(iii) whether the plaintiff/petitioner is entitled to continue the agency and or claim damages from the principal on the pleadings as made by him in his plaint and if so to what ultimate relief he will be entitled on the facts and in the overall circumstances of the case.
(iv) whether the plaintiff/petitioner had not submitted his account to the principal in terms of the contract and whether he was justified in withholding the same on any legal ground ; and
(v) whether the termination of contract in this case was lawful or not.
5. These are all substantial questions of law and fact and since they involve a careful study and scrutiny after leading of appropriate evidence, therefore, the High Court was not justified to refuse grant of a temporary injunction as prayed for at this stage. In the circumstances we are inclined_ to grant leave to appeal to the petitioner and converting this petition into an appeal accept the same and hold that this was a fit case in which a temporary injunction ought to have been granted on terms."
12. As already observed, the impugned order has also been assailed on the ground that through this order, the learned lower Court has in fact granted mandatory injunction to N T C against P P C directing PPC to continue to supply goods to the NTC. Although under Order XXXIX, rule; 1 and 2, C.P.C. For the maintenance of status quo, a mandatory injunction cannot be passed. In WAPDA v.
Muhammad Yaqub it was held that provisions of rules 1 and 2 of Order XXXIX, C.P.C. Do not permit issuance of injunction in mandatory form. Similarly, in Sughran Bibi v. Mst. Rabia it was held that passing of orders which are aimed at bringing about status quo ante was not warranted and thus an injunction in mandatory form could not be issued. In Muhammad Ashid Ali v. The Province of East Pakistan and others it was held that mandatory ad interim injunctions could be issued rarely and only in case of imminent grave danger to life or property and for purposes of maintaining status quo. In Mls Gharibwal Cement Ltd., Lahore v. Mls. Universal Traders, Ghakkhar Mandlwhere no supply of goods was made by the producer to the agent for a long time, it was held that injunction in such eventuality has to made in form of mandatory injunction and such injunction could not be issued under Order XXXIX, rules 1 and 2, C.P.C.
13. It is clearly deduceable from the aforementioned authorities that a mandatory injunction cannot be issued under the provisions of rules 1 and 2 of Order XXXIX, of the Code of Civil Procedure and an injunction in this form should be issued rarely. It has, however, to be seen as to whether with reference to the circumstances of the under consideration case, the injunction has been issued against P P C is in fact a mandatory injunction and was its issuance justified. P P C as per terms of the distributorship agreement used to supply its products to N T C regularly. Through the impugned order, it has been directed by the learned Court below by way of temporary in-juction not to stop supply of its products to N T C. This means that, through the impugned order, status quo has been directed to be maintained and it does not amount to mandatory injunction. In Jamil Ahmad v.
Provincial Government of West Pakistan it has been held that proper course is to maintain status quo until disposal of suit and temporary injunction should be granted for maintaining status quo. In Mls. Jamia Industries Ltd v. Mls. Pakistan Refinery Ltd., Karachi. It was held with reference to section10 11 12 13 14 15 20 of the Arbitration Act that a substantial dispute between the parties covered by arbitration agreement can be referred to arbitrator.
It was further held that if a dispute between the parties arising out of breach of contract is referred to arbitrator under section 20 of the Arbitration Act and such dispute has yet to be decided upon by the arbitrator, the application for temporary injunction for maintaining status quo under section 41 of the Arbitration Act is competent and is not barred by section 56 of the Specific Relief Act.
14. It may also be observed that in suitable cases a mandatory injunction can also be issued as an interim relief under section 151, C.P.C. In WAPDA v. Muhammad Yaqoob it was held that in cases in which it is found expendient in the interest of justice to give immediate relief, the Court can issue an injunction in a mandatory form not under Order XXXIX, rules 1 and 2 but in exercise of the inherent powers of the Court which are conferred by section 151, C. P. C.
15. In the light of the above discussion, it is concluded that in the circumstances of the case, N T C had a prima facie case against P P C for grant of temporary injunction and the temporary injunction issued through the impugned order by the learned Court below is for the maintenance of status quo. The impugned order, therefore, is neither violative of the principles governing the grant of temporary injunction as contemplated by rules 1 and 2 of Order XXXIX of the Code of Civil Procedure nor it is beyond the scope of section 41 of the Arbitration Act.
16. In this view of the matter, Civil Revision Petition No, 1111/82 fails and is accordingly dismissed.
17. So far as Civil Revision/Petition No, 1175/82 is concerned, it may be observed that N T C's prayer "for restraining P P C from supplying its products to any other person within the areas the distributor's rights of which vests with N T C be withheld", has been refused for very valid reasons. In the distributorship agreement dated 28th February, 1981 there is no restriction placed on P P C from supplying its products to distributor's other than N T C in the area for which N T C was appointed distributor through this agreement. It is an admitted fact that on 28th February, 1981 when distributorship agreement was executed between the parties, P P C executed as many as eleven other distributorship agreements with different other companies like Data Corporation, Amritsar Paper Store, Nawab Shah and Co. Etc. These other distributors were also appointed for the same area for which N T C was appointed.
18. The learned counsel for N T C has placed reliance on clause (11) of the distributorship agreement which is to the effect that P P C shall not sell its products to any other party except those which find mention in this clause. The prohibition contained in clause (11) of the agreement is applicable in case of direct consumers as has been held in the impugned order and it does not operate as bar against P P C's powers to execute other distributorship agreements like the ones it has already executed in favour of N T C and 11 others enumerated above. The learned lower Court was, therefore, justified to refuse N T C's prayer to restrain P P C from supplying its products to any other distributor within the area in regard to which distributorship rights vest in N T C.
19. In this view of the matter, Civil Revision Petition No, 1175/82 is also dismissed.
20. In both the cases, the parties are left to bear their own costs. AIR 1957 Madh. Pra. 223 AIR 1925 P C 161 AIR 1956 Cal. 188 PLD 1958 (W.P.) Lah, 63 PLD 1969 Dacca 269 176 I C 675 PLD 1965 Kar. 202 PLD 1973 Kar. 49 1980 SCMR 5881 2 3 4 5 6 7 8 9 PLD 1973 Note 12 at p. 20 1982 CLC 344 1970 D L C 732 PLD 1977 Lah. 481 PLD 1982 Lan. 49 PLD 1976 Kar. 644