' It is an application under Order XXXIX, rules 1 and 2 read with section 151, C. P. C. Made by the plaintiff to suspend the operation of the notices of termination dated 24-10-1985 and/or restrain defendant No, 1, their Managers and/or such representatives and all persons claiming through or under them from giving effcct to the two notices of termination of the agency of the plaintiff dated 24-10-1985 and/or taking any other or further action or steps thereon in pursuance of preventing the plaintiff from carrying on business and operation as the exclusive agent of defendant No, 1 under the Memorandum of Agreement dated 14-4-1977 and 25-12-1981 and from appointing any other person/persons as the agent for sale or distribution in Pakistan, pending the hearing and final disposal of the above suit filed by the plaintiff for declaration, injunction and damages.
2. The facts giving rise to the said application/suit, as stated in the plaintiff/affidavits of the plaintiff in support of the said application are that defendant No, 1 appointed the plaintiff as its exclusive Agent for Pakistan for the sale, marketing and distribution of Freezers/Refrigerators/ Chest Freezers, Juicer/Blenders, Dry Batteries and other Home Appliances of all types aand sixes through its Memorandum, dated April 14, 1977 for a period of two years, which, however, was to be automatically extendable every two years for two years period unless either party gave a written notice of termination to other party hereto at least three months before the expiration date. Later on, by another Memorandum, dated 25th December, 1981 defendant No, 1 appointed the plaintiff its exclusive distributor in Pakistan for the complete range of Sanyo Refrigerators and Air-conditioners which included all types of Window type Air-conditioners, split and package type Air-conditioners, Refrigerators, absorption Chillers and Air Cooled /water cooled chillers for a period of two years, which, however, was automatically extendable every two years for two years period unless either party gave a written notice of termination to other party at least 60 days before the expiration date. The plaintiff accepting the said terms of Memorandum entered upon the said agency/distributorship of the products of defendant No, 1 and, as alleged, made ,certain investment in Pakistan for the purpose of promoting the sale of products of defendant No, 1 under the brand name of "Sanyo" and established offices/sales and service centres for the said purposes.
In or about November, 1984, defendant No, 2 approached the plaintiff for the purpose of acquiring tae entire business of the aforesaid rights of exclusive agency/distributorship vested with the plaintiff and its associate hrms/ concerns which were dealing with the manufacture assembly and sale of Sanyo Refrigerators and Air-conditioners, which the plaintiff agreed, with the knowledge and consent of defendant No, 1 and an agreement was entered into between defendant No, 2 and the plaintiff as well as its associate concerns/companies which included the purchase of the plaintiff's entire business assets, rights, good-will and properties for a total consideration of Rs, 7,17,00,000 and an earnest money/ advance of Rs, 75 lacs was paid by defendant No,
2. However, the said agreement fell through which resulted in the filing of Suit No, 74' of 1985 in this Court by the plaintiff against defendant No, 2 for, inter alia specific performance of the said agreement for sale, which was subsequently followed by riling of another Suit No, 755 of 1985 in this Court by defendant No, 2 against the plaintiff and others for recovery of Rs, 7 crores by way of damages.
3. The plaintiff on of about 24-10-1985 received two telexes from defendant No, 1 purporting to terminate the agency/distributorship under the above said Memorandum dated 14-4.197 and 25- 12-1981, with effect from 23-1-1986 and 2i-12-1935 respectively. The said telexes were also followed by two letters confirming the said text of the said tele es. Being aggi ieved by the said telexes/lette s terminating the said agency/ distributorship, the plaintiff on 22-12-1985 filed this suit and the application for interim injunction. As referred to above. An ad interim injunction was issued in favour of the plaintiff, as prayed, by a learned Single Judge. Meanwhile, counter-affidavits and re- joinders were filed by the parties. This application as new come up before me for hearing.
4. Mr. Liaquat Merchant, learned counsel for the plaintiff has made four-fold submissions, which are as under :-
(1) There exists express contract of agency with interest in favour of the plaintiff and thus the agency cannot be terminated unilaterally by defendant No, 1 to the prejudice of the interest of the plaintiff.
(ii) The agency has been terminated mala fide by defendant No, 1 at the instigation of defendant No, 2.
(iii) Unless the letter of termination is suspended and defendant is restrained from appointing another person as Agent the plaintiff shall suffer an irreparable loss.
(iv) The balance of convenience is in favour of the plaintiff.
5. On the contrary, Mr. A. K. Brohi, learned counsel for the defendants raised following contentions :
(i) There exists no agency between the plaintiff and defendant No, 1 as contemplated by the Contract Act, 1872, much less to say an agency with interest. In any case. It is revocable.
(ii) There is no mala fide on the part of defendant No, 1 in cancelling the contract and that the contract was not cancelled on the instigation of defendant No, 2.
(iii) The plaintiff can be reasonably compensated,in terms of money for the alleged breach of the contract.
(iv) Balance of convenience lies in favour of defendant No, 1.
(v) The suit is bad for non-joinder of Solid Corporation (Japan) which is a necessary and proper party to the suit. There is no direct dealing between the plaintiff and defendant No, 1 as all the supplies were made by Solid Corporation (Japan) to the plat tiff.
6. Mr. Liaquat Merchant, learned counsel for the plaintiff in support of his first submission invited my attention to the words "exclusive agent- and "exclusive distributor", as mentioned in the Memorandum dated 14-4-1977 and 25-12-1981 respectively and several paragraphs of the plaint.
To substantiate his submission that the plaintiff has an agency with interest, reference was made by him to Annexures X-1 to x-11. Bearing advertisements made by the plaintiff in respect of Sanyo products mentioning the plaintiff as Sole gent/Distributor of defendant No, 1 and submbitted that 50%of the said advertisement charges were paid by defendant No, I. He also invited my attention to Annexures marked as X-29 regarding training of plaintiff's Engineers by defendant No, 1 and X-12 to X-14, which are the certificates of trainling in Air-conditioning issued by defendant No, I to three employees of the plaintiff. He also referred to X-27 regarding establishing womshops at Lahore and Rawalpindi and warranty certiticates for Duty free Shops and X-39 to X-55 for making certain enquiries by defendant No, 1 through the plaintiff and X-56 to X-58 showing direct dealings of defendant No, I with the plaintiff. He also relied on the provisions of section 202 of the Contract Act, 18/2.
7. In view of the contention raised by Mr. A. K. Brohi the first question which has arisen in this case is whether there exists at agency in favour of the plainntiff in terms of the provisions of the contract Act, 1872. If so; whether it is coupled with an interest of the plai Aid. In the propetty which forms the subject-matter of the agency and whether the said agency, in the circumstances of the case, can be revoked.
8. Mr. Brohi to substantiate the first limb of his contention that there exists no relationship of agent and Principal has referred to a passage from the Contract Act, 1872 by Shaukat Mahmud, Second Edition, 1981, page 676 which is as under :- The use of the word "agent" in a general way, loosely without specifying the purpose of agency.
Does not help to determine, as a matter of fact, whether a person is an agent or not 14 Mad. L. Tim.
249 (D. B.) Where the plaintiff brings a suit for damages against the defendant describing the latter merely as a 'commission agent', that by itself would not be conclusive for determining the correct relationship between the parties. Even where the word "agent" is used. The relationship between the parties may be still of two principals contracting with each other. The actual status of the parties must be determined with reference to all the circumstances, and not merely with reference to the word used [AIR 1963 Patna 407 (D. B.) and AIR 1933 Cal. 204 (D. B.)]."
9. To decide the question it will be advantageous to have a survey of the various provisions of the Contract Act, 1872, elating to the law of Agency.
10. Section 182 defines an agent as a person employed to do any act for another or to represent another in dealing with third persons. Section 186 provides that the authority of an agent may be express o implied. Section 189 authorises an agent, in emergency, to do all such acts for the purpose of protecting his principal from loss. Sections 201 to 210 deal with revocation of authority.
An agency is terminable by the principal revoking his authority, or by the agent renouncing the busines of the agency, and where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of express contract, be terminated to the prejudice of such interest. Where there is an express or implied contract that the agency should b continued for any period of time, the principal must make a compensation to the agent, for any previous revocation or renunciation of the agency, without a sufficient cause. When an agency is terminated by the principal, the agent is bouni to take all reasonable steps for the protection an preservation of the interest entrusted to him. Sections 211 to 221 provide for agent's duty to principal whereas sections 222 to 225 provide for principal's duty to agent.
11. Examining the facts of the case, as revealed through the plaint affidavits, counter-affidavits and rejoinders and the various annexures file therewith in the light of the relevant provisions of the Contract Act, quot above, it appears that the cardinal words defining an agent under section 182 are the "doing of an act by a person employed by another to d that act, while representing the principal in dealings with third persons. It may be under a power-of-attorney or a letter of appointment. By th two Memorandums, referred to above, it is difficult to ascertain wit reasonable certainty the nature of the act which the plaintiff is to perfo "for the principal" (defendant No, 1).
Simply the use of the word "agent' or "distributor" in the said Memorandum cannot be said to be decisivi so as to conclude the creation of "agency" in terms of the provisions o section 182 or some other sections of the Contract Act, which I will pre gently deal with. By a bare reading of the said Memorandum it see that the plaintiff is a "Sole Purchaser" of the products of defendan No, 1 as borne out of the said Memorandums, to the exclusion of all other intending purchasers in Pakistan.
For the purchases of the said products of defendant No, 1 which the plaintiff makes or may make fro defendant No, 1 there is no limitation as to the quantity, price or corn mission. It, thus, appears that he becomes an owner in law of the sat' products purchased by him from defendant No, 1 in that exclusive capacity, as there is no liability of the plaintiff to account qua those good which, in law, is inconsistent with the obligation, generally speaking, o an agent under the Contract Act.
There seems to be no responsibility of the plaintiff to defendant No, 1 as no obligation is created under the said Memorandums These two Memorandums do not say anything by way of commission chargeable on these products or for the acts done b the plaintiff to promote the sales, which the plaintiff, probably, could sell in the manner and at whatever price, it liked. There is also no en treatment of products of defendant No, I with the plaintiff involving an fiduciary relationship as provided in section 212. In fact, the Plaint'becomes the owner of the products purchased by it from defendant No,
1. It is true that the advertisements do bear the words "Sole Agent" and "Sole Distributor", the expenses whereof were partly contributed b defendant No, 1, but an advertisement is in the nature of an adventur to promote the sale and a commercial incentive to the common interes of both the plaintiff and defendant No,
1. It cannot be taken to be an exclusive sign of conferring authority on the plaintiff as an agent of defendant No,
1. These advertisements and the purchases made by the plainti from defendant No, 1 do not prove that the plaintiff was an agent withi the meaning of section 182 of the Contract Act, as nothing happene pursuant thereafter, since there was no liability to account for to th principal for the purchases made by the plaintiff. I am, therefore, clear in my mind that the plaintiff's capacity described in the said two Memoran dums as "exclusive agent" or "exclusive distributor" does not go along with and run parallel to the provision of section 182 and other provision of the Contract Act, 1872, referred by the hereinabove and the transaction, prima facie seems to be that of principal to principal. Faced with thi situation, Mr. Liaquat Merchant submitted that the Contract Act, 1872 is not exhaustive, and same is the position relating to the law of agency which forms part of it. -Reliance was placed by him on a Privy Council's decision reported as Jawaladurt R. Pillani v. Bansilal Motilal (1) which referred to the case of the Irrawaddy Flotilla Company v. Bugwandas (2) wherein Lord Macnaghten had observed as under :- "The Act of 1872 does not profess to be a complete code dealing with the Law relating to contracts.
It purports to do no more than to define and amend certain parts of that law. No doubt it treats of bailments in a separate chapter. But there is nothing to show that the Legislature intended to deal exhaustively with any particular chapter or sub-division of the law relating to contracts."
The provisions of this Act were enacted as long back as 1872. Nearly 114 years have passed and in this everchanging world, the commercial transactions have taken various shapes and forms, which may not necessarily fall within the ambit of the provisions of the said Act. The Contract Act embodies a number of limiting principles which create mutual rights and obligations in a codified form, but so long as the parties do not violate some legal prohibition, they can agree on whatever terms they like.
(1) AIR 1929 P C 132 (2) (1891) 18 Cal. 620 in respect of the subject-matter of their contract, and the law, which it eludes principles, trade practices and customs having the force of lays will give effect to them. I, therefore, agree with Mr. Liaquat Merchan that the provisions of the Contract Act including the law of ageno embodied in the Contract Act, 1872, are not exhaustive, speaking as whole, but to the extent it lays down certain provisions it is exhaustiv and imperative.However, the position of the plaintiff, as emerged in this case, may be viewed on its own facts and circumstances though it may be be falling within the term 'Agent' as used in the provisions of the Contract Act, as aforementioned. 1 am. Therefore, of the view that there is a re lationship between the plaintiff and defendant No, I which is governed be the Memorandums themselves giving exclusive right of purchase of the products of defendant No, 1 to the exclusion of all the population of Pakistan, within the period stipulated therein. Admittedly under the first Memorandum dated 14-4-1977, the contract, whether it is calk `agency' or 'distributorship' or give it any other name, as per term con tained in it automatically got extended upto 13-4-1987 and in the case of second Memorandum dated 25-12-1981, the contract got automatically extended upto 24th December, 1985.
12. Now, the second limb of the question to be examined is whether it is 'a contract with interest' as stipulated in section 202 of the Contrac Act. The section reads as under :- "Where the agent has himself an interest in the property which form the subject-matter of the agency, the agency cannot, in the absent of an express contract, be terminated to the prejudice of sucl interest. Illustrations
(a) A gives authority to B to sell A's land, and to pay himself, ou of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
(b) A consigns 1.000 bales of cotton to B, who has made advance to him on such cotton, and desires B to sell the cotton, and to repay himself, out of the price, the amount of his own advance's A cannot revoke this authority, nor is it terminated by his insanit: or death."
13. Mr. Liaquat Marchant also relied on ,several passages fron Ansbn's Law of Contract 24th edition which also find place in 23nd edition at pages 584 and 585, which reads as follows :- "The authority given to an agent may become irrevocable in thre main instances : (a) when it is coupled with an interest, (b) when I is contained in a power of attorney, (c) when revocation would cause the agent personal loss.' (page 584)."
"Where the agent has, in pursuance of his authority, contracted personal liability or become liable to personal loss, the agent cannot be revoked by the principal without his consent, for this would be to defeat rights already established.
' The liability incurred by the agent may either be a legal liability, as when he binds himself by contract to pay to a creditor of his principal a deb which he has been authorized to receive (Hodgson v. Anderson (1825) 3 B. & C. 842) or it may simply be a loss which is likely to occu in fact, for example, where a betting commissioner places bets on behalf of his principal which he must pay or loss his business (Read v. Anderson (1884) 13 Q B D 779) now reversed by the Gaming Act 1892 (55 & 56 Viet., 9), S. 1 ; ante, page 316) (page 585).".
' Also placed reliance on the case reported as Prahlad Pd. Modi and ?Other v. Tikaitni Faldani Kumari and another (I). The learned Judges of le Patna High Court referred Law of Agency by Bewstead Article 140 of le said Book (ed. 10) at page 275, which reads as under :- "Where an agent is employed to enter into any contract, or do any otha lawful act involving personal liability, and is expressly or impliedly authorised to discharge such liability on behalf of the principal the authority becomes irrevocable as soon as the liability is iucurred by the agent." chance was also placed on the observation of Couch, C. J. In the case .Of estanji Mancharji Wadia v. Joseph Matchett (2) who laid down :- "Where an authority or power is given for a, valuable consideration or is part of a security, unless there is an express stipulation that it shall be revocable, it is, from its own nature and character, in contemplation of law irrevocable, whether it is expressed to be so on the face of the instrument creating the authority or not. This rule has been acted upon in many reported cases, of which it will be sufficient to mention the following.
' In Gaussen v. Morton (1830) 10 B & C 731 (B), A being indebted to B, to discharge the debt, executed to a power of attorney authorising him to sell certain lands belonging to him, to A. It was held that the authority could not be revoked. In Bromley .v, Holland, (1802) 7 Ves 3 (28) (C) Lord Eldon said that, where a power of attorney is executed for a valuable consideration, the Court of Chancery would not permit it to be revoked. And in Walker v. Restron (1842) 9 M & W 411 (420) (D) Lord Abinger, in giving judgment, said, "The existence of a debt, although it be not due instantly, is a good consideration ; and so it is to take lawful and proper means to provide for payment, even though they be conditional, if we were to hold otherwise, you might deny the consideration for a collateral security for .Any debt which might not be due at the moment, although it is very common thing to require and obtain such security."
14. Applying the principle that has emerged from the case law cited Mr. Liaquat Merchant to the facts of the present case as borne out of documents filed by the plaintiff alongwith the plaint and the rejoinrs, the nature of interest, as disclosed, is three-fold :-
(i) The plaintiff issued personal warranties/guarantees to the purcha's of the products of defendant No, 1 which are in the nature of personal biiity ; the plaintiff also issued warranties/guarantees in respect of the rchases made by customers from Duty Free Shops : (ii)
The plaintiff addition to its Service Centre at Karachi established Service Centres at tore and Rawalpindi as asked by defendant No, 1 and made .Huge vestment therein ; (iii) The plaintiff got its Engineering Staff trained
(1) AIR 1956 Pat. 233 (2)Bom.HCRAC10 A by defendant No, 1 and incurred a good amount of expense which will go waste, if the agency is revoked.
15. So far as the first point is concerned, it has two parts : the first relates to warranties/guarantees issued by the plaintiff on general sales in respect of Sanyo products purchased by the customers from it. This -sort of warranties/guarantees were in the knowledge of the plaintiff and defendant No, 1 while entering into the contract in 1977 or in 1981. The said warranty/guarantee as alleged was to continue (or 5 years, whereas the period of the contract, first agreed, was for two years only. So, it was in the contemplation of the parties and particularly the plaintiff that for the purchases made by the customers through the plaintiff it will bind itself for a period beyond the period agreed in the contract. Moreover, except for the manufacturing defect for which defendant No, 1 is held liable, the plaintiff charges for the service as is evident from the documents X 51, 52 and 53, which it has itself produced. Second part of the warranties guarentees issued by the plaintiff relates to the purchases made by the customers from Duty Ftee Shops. It appears from the documents produced by the plaintiff that this arrangement was at the request of defendant No, 1 made to plaintiff in 1985. It does not seemingly relate to two Memorandums P. 1 and P. 4 as the plaintiff was free to accept or reject the suggestion inasmuch as the purchases made from Duty Free Shops were not the purchases made from the plaintiff under the two Memorandums. It was a distinct arrangement between the defendant No, 1 and the Importer for Duty Free Shops which may, perhaps, be a Government agency.
16. As regards the service centre at Karachi, it went alongwith the two Memorandums. Service after sale is a well-known commercial phenomenon in the modern business world, which works as a lever in boosting up the sales. It does not, to my mind, create a personal interest of the plaintiff/qua defendant No, 1.
17. As regards the training of the plaintiff's Engineers, it appears that it relates to the manufacturing unit which is the subject-matter of two other agreements, which have been brought on record during course of arguments by consent of the parties. These agreements which are termed as Technical Assistance Agreement, have nothing to do with the two Memorandums.
18. Mr. Liaquat Merchant has stressed much on the huge investments made by the plaintiffs in the business of the alleged agency. It appears that the plaintiff has also included the alleged huge amounts in the investments made by its associate concerns, which are not co-plaintiffs in the suit, in relation to setting up of manufacturing assembling unit of Air Conditioners/Refrigerators, which admittedly are the subject-matter of two other agreements and have nothing to do with the alleged agency. However, I am afraid, the mere investment does ring no bell unless the interest which is allegedly involved fulfils the condition that it forms part of the subject-matter of the contract as provided in section 202 of the Contract Act. After all, the plaintiff had to make certain investments in the business, for example, on hiring the shops/offices at several places, setting up of a service centre, employing staff etc., if it is to acquire sole-selling rights of the products of defendant No, 1, to the exclusive of all others, but such investment does not necessarily fall within the scope of "interest" as mentioned in the said section. Mr. Liaquat Merchant also submitted that the plaintiff acted as agent of defendant No, 1, while contacting various Government agencies, such as Pak-Bahria, Children's Hospital Complex at Islamabad. It may be true, but the same was under special assignment, either on fee basis or friendly basis, having nothing to do with the two Memorandums. For example, the Children's Hospital Project, as frankly admitted by him, was under the Foreign Aid Programmb offered by the Government of Japan.
19. To my mind, the two statutory illustrations given at the end of section 202 contemplate that the interest of the agent, forming subject-matter of the agency, is to be some sort of an adverse nature qua the principal. So, according to the true construction and scope of section 202 the agency can be said to be coupled with interest where the authority of an agent is given for the purpose of effectuating a security or of securin an interest of the agent. This can be inferred from the documents forming the basis of agency or from the course of dealings between the parties and from the other surrounding circumstances. Looking to the facts of the case, the plaintiff has, prima facie, failed to satisfy me that it has an interest as contemplated by section 202 of the Contract Act and the Law laid down in AIR 1956 Pat. 233, and other cases cited therein. The passage quoted from Anson's Law of Contract also does not help the plaintiff.
20. Now I come to the third limb of the question viz. Revocation of the contract. A contract of agency, generally speaking, is revocable, as it is contemplated by section 201 of the Contract Act.
Sections 202 and 205 appear to act as rider on section 201. The principle underlying these sections, as it appears to me, is that a contract of agency, in its very nature, is terminable. However, if it is coupled with interest of the agent in the property forming part of the subject-matter of the agency it cannot be terminated to the prejudice of such an interest, unless there is an express contract to it that it can be unilaterally terminated even to the prejudice of such interest. Furthermore, if it is intended that the contract of agency should be continued for any fixed period of time and the principal revoke such an agency without sufficient cause, prior to the expiry of that period of time, it must compensate the agent. In the instant case, it appears, as submitted by Mr. Liaquat Merchant that the contract entered into by Memorandum dated 14-4-1977 is to continue in force tit 13-4-1987 and in the case of the other Memorandum dated 25-12-1981 it has come to an end on 24-12-1985.
The two Memorandums do provide for notice of termination of the contract. In the case of second Memorandum the notice, prima facie, seems to be proper, whereas in the case of the first Memorandum the terminal date is 13-4-1987 and the notice for termination is stipulated for 3 months preceding that date. In case it is intended to terminate the first contract much ahead of the said terming date, it may, perhaps, attract the provisions of section 205 for compensation if it is without sufficient cause. What is sufficient cause, it differs fro case to case. For the present, I am not called upon to investigate this point any further as I am, at the moment, only to see whether, in th circumstances of the case, the notice of termination of the contract, a provided in the two Memorandums can be suspended. Mr. Liaqua Merchant has placed his reliance on the cases of:
(i) Muhammad Aref Effendi v. Egypt Air 1980 SCMR 588.
(di) Pakistan Automobile Corporation Limited and another v. General Motors Overseas Distribution Corporation and 2 others PLD 1982 Kar.
796.
(it) Adamfee Paper and Board Mills Ltd. v. Maritime Agencies Ltd. 1984 CLC 440.
(iv) S. A. Abbasi v. Chairman District Council Gulshart-e-Iqbal, Karachi PLD 1985 Kay. 400 and
(v) an unreported order dated 4-2-1986 passed by a learned Single Judge of this Court on an application under Order XXXIX, rule 2, C. P. C. In Suit No, 210 of 1985 (Kashmir Corporation Ltd. v. P. I.
A.).
21. In the Supreme Court case 1980 SCMR 588 the first in the field on the point at issue, has been referred to -in the cases decided by this Court cited at Serial Nos. (ii) and (v) above. In the said decision, it was observed by the Honourable Supreme Court that the case, under appeal, involved substantial question 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 tnis 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."
22. I am conscious of the fact that Article 189 of the Constitution of Pakistan, 1973, provides that any decision of the Supreme Court, to the extent that it decides a question of law or is based upon or enunciates a principle of law is binding on all other Courts in Pakistan. I have, therefore carefully read this decision in order to see if it decides any question of law or a principle of law, and, with utmost resp:ct, I must confess that I failed to notice either of two. For this view, I am supported by the observation made in PLD 1982 Kar. 796 by my learned brother, Mr. Jeatice Ajmal Mian. Whose crder was impugned before the Honourable Supreme Court, which reads as. Follows :- "It may be observed that in the above case Supreme Court was pleased to grant an ad interim injunction on the conditions quotad in the above para.
7. From the above judgment of the Supreme Court, it is evident that the Supreme Court was of the view that in a fit ,ase even where a party seeks the specific performance of an agency agreement, the Court can grant an ad interim injunction for keeping intact above contract till such time as it may consider just and proper or til the disposal of the suit. Messrs Liaquat Merchant and Sharif's contention that the Supreme Court as a general rule has not laid down that in every case, in which a party alleges that agency agreement in his favour is coupled with interest, the Court is obliged to grant an ad interim injunction, seems to be correct. Each case is to be examined on its own merits."
' Reliance is also placed by me on the cases of Abdul Aziz Shah and another v. Abdul Ghafoor and another (1), Asif Jab Siddiqui v. Government of Sind and another (2), B. Shama Rao v. Union Territory of Pondicherry (3) and A. Khan Leghari, C. S. P., Member Board of Revenue, West Pakistan Lahore Government of Pakistan through Secretary to Government of Pakistan Establishment Division, Rawalpindi (4).
23. In nutshell, what the Honourable Supreme Court has said in the above decision is that if the case involves substantial questions of law and fact a temporary injunction to the plaintiff ought to be granted on terms, or. In other words, if the plaintiff has an arguable case, temporary injunction should be granted to it as held in some other case. But this, again, differs from case to case. As it appears to me, with all respect, the above decision of the Honourable Supreme Court does not make any inroad into the settled principles for the grant of temporary injunction. In the present case, bulk of documentary evidence on affidavits has been produced by the plaintiff to substantiate its pleas and after examining the relevant questions in the light of the said, evidence. I have come to an irresistable conclusion that the plaintiff has failed to make out a prima facie case for the grant of interim injunction. Furthermore, the decision of the Supreme Court is distinguishable inasmuch as in the Egypt Air case there, perhaps, existed an agency as contemplated by sections 182 and 202 of the Contract Act, whereas in the instant case it is not so.
24. In the second case PLD 1982 Kar. 796 a learned Single Judge of this Court suspended the operation of the termination notice, dated 30th March, 1981, till the disposal of the suit, subject to the condition that the said suit shall be fixed for regular hearing within a period of four months and that upon expiry of 5 months period it will be open to defendant No, 1 to apply to the Court for vacat on of the above suspension order, in case they can make out a prima facie case for that purpose. It will not be out of context to mention here that the observation of the learned Judge was, in fact, based upon a letter dated 4-1-1981 that by August, 1981, the arrangement under letter dried 21-8- 1973 would continue so as to enable the plaintiff to sell the goods and thereafter it will be discontinud. It appears that the learned Judge, in the circumstances of that case, suspended the operation of the notice till the expiry of the remaining period of five months of the contract of agency which, prima facie, seemed coupled with interest.
25. In the 3rd case 1984 CLC 440, Mr. Justice Zafar Hussain Mirza, a learned Single Judge of this Court (as he then was, now Judge of the Supreme Court), observed as under:- "now the first question to consider is as to the nature and scope of the interlocutory relief prayed for in the application. It goes
(1) 1985 SCM R 221 (2) PLD 1983 S C4.15
(1) AIR 1967 SC 1480 (4) P 1. D 1965 (W. P.) Lah. 214 without saying that the facts and the circumstances of this case do not warrant the exercise of power under Order XXX1X, rule 6, C. P. C. For the conditions of that rule are totally absent in this case.
It is also true that if this is an application for injunction, it would be of a mandatory nature and would, therefore, not. Be sustainable in law. It is well-settled that injunction in the mandatory form can only be issued to restore status quo as on the date of institution of the suit and not so as to bring about a new state of things."
' It appears that the Court while deciding an application under Order XXXIX, for the issue of temporary injunction would not generally, issue an injunction of a mandatory nature, but an injunction can be issued in the mandatory form to maintain status quo.
26. In the 4th case PLD 1985 Kar. 400 it was observed by my learned brother Mr. Justice Naimuddin (now Chief Justice) of this Court that while granting an application under Order XXXIX, rules 1 and 2, C. P. C. Conditions mentioned in sections 53 and 56 of the Specific Relief Act, 1877, have to be taken into consideration even at the stage of granting injunction under section 53 of the Specific Relief Act read with Order:: XXXIX, rules 1 and 2, C. P. C.
27. The 5th case relates to an order by a learned Single Judge of this Court, granting temporary suspension of the notice of termination of domestic passengers sales agreement and the ground service handling agreement, existing since 1970 on the condition of furnishing Bank guarantee by the plaintiff and fixing the case for regular hearing after a month. The learned Judge appears to have followed simply the decision of the Supreme Court as the facts of both the cases on all fours were found to be identical which, as I have already stated, is not the case here.
28. On the other hand, Mr. A. K. Brohi referred to the case of Hums: Enterprises and 3 others v. S. Fir Ali Shah and others (1), wherein it, was observed by a learned Single Judge of this Court that even in a case termination of notice is not given which was -provided by the agreement the plaintiff could only ask for damages and not permanent injunction as such an agreement cannot be specifically enforced. The Supreme Court's decision in Egypt Air case was also found distinguishable.
29. The well-settled principles for grant or refusal of interim injunc tion are: firstly, whether the plaintiff had made out prima facie case for the grant of interim injunction, secondly, whether the plaintiff shall suffer g irreparable loss, if injunction is refused and, thirdly, whether the balance of convenience lies in favour of the plaintiff. It has already been observe by me that the plaintiff is not an agent within the meaning of section 182 of the Contract Act. It, however, enjoys the exclusive right of being a "sole purchaser" to the exclusion of all others, of the products of defendant No, I.
Listed in the two Memorandums, which, however, in the case of the second Memorandum dated 25-12-1981, stands terminated as on 24-12-1985, on the termination of two months period of notice expressly provided in the said Memorandum, whereas in the case of first Memorandum dated 14- 4-1977, it stood extended automatically till 13-4-1987, which is however, revocable under section 201 read with section 205 of the Contract Act, as the plaintiff has prima facie failed to satisfy me that the Memorandum dated 14-4-1977 is a contract coupled with interest as
(1) 1985 CLC 1522 provided in section 202 of the Contract Act. Even otherwise, 'the contract with interest' is terminable if it is so provided in the contract itself. Th contract, in the instant case, provides a period of 3 months' notice before expiration date of the contract, which remains in force till 13-4-1987, as having been already extended automatically on the last expiration date, under t e terms of the contract. The question which is now agitating my mind is whether the plaintiff is entitled in law to an injunction, by way of suspending the operation and effect of the termination notice dated 25- 10.1985 till 13-4-1987. During the course of arguments .On 18-2-1986, Mr. Khalid Anwar, learned counsel for defendant No, I referred to section 21 of the Specific Relief Act, 1877 with illustrations to clause (b) that a contract to supply with all tne goods of a certain class which may be required under the contract cannot be specifically enforced. I agree with the submission of the learned counsel that the contract dated 14-7-1917 is, in its nature, revocable, subject to notice. The issuance of temporary injunction will amount to compelling defendant No, 1 to carry on trade with the plaintiff whose business as admitted by the plaintiff itself in its letter, dated 26th October, 1985, was in a state of deadlock, resulting in a tremendous fall of sales to a petty sum of Rs, 3,12,126 during 1985. The injunction against defendant No, 1 will bring colossal loss to the business of defendant No, 1 and will be to its great disadvantage probably for its no fault. On the contrary, the loss, if occasioned to the plaintiff is measurable in terms of money and the damages can be compensated reasonably in terms of money which the plaintiff has already valued at Rs, 5,20,53,300 and claimed in the above suit. The balance of convenience in the case also does not lie in favour of the plaintiff.
30. The decision of the Supreme Court in the case of West. Pakistan Industrial Development Corpora ion, Karachi v. A:iz Qureshi (I) may also be referred. The following observations seem to be relevant to the facts of the present case :- "Reading the three sections (203, 205 and 206 of the Contract Act) together it seems to me evident that if the principal without sufficient cause revokes the agency before the expiration of the period mentioned in the contract, he must make compensation to the agent. Furthermore, that unless reasonable notice is given of such revocition, the principal must make good the damage resulting to the agent."
31. As regards the allegation of the plaintiff that the alleged agency has been terminated maia fide by defendant No, l at the instigation of defendant No, 2 Mr. Liaquat Merchant submitted that the deal with defendant No, 2 was brought about with the knowledge and consent of defendant No, 1.
Defendant No, 2 in order to get rid of the same and cause wrongful loss to the plaintiff and wrongful gain to himself mano:uvred in getting the said agency existing in favour of the plaintiff, terminated.
In support of the submission, he referred to Annexure X-3 filed alongwith the affidavit in rejoinder dated 15-1-1986 of the plaintiff in reply to the counter-affidavit of Muhammad Arif, attorney of defendant No 2. This is a letter dated 16-10-1985 written by plaintiff Shamim to defendent No,
1. It will be advantageous to reproduce the said letter, which reads as under :- "Re my TLX No, 1369/6-10-85 still awaiting anxiously your TLX reply
(1) 1973 SCM R 555 In spite of our best efforts Mian Muhammad Siddiq is not honouring his financial commitment and concluding the sale transaction on the terms and conditions mutually agreed after year long negotiations.
' I again appeal to you to use your weight to persuade Mian Muhammad Siddiq to fulfil the agreed terms in purchase stock/Inventory of spares in machinery (approx. 7 million dollars). Eagerly awaiting your favourable TLX reply."
32. Mr. Brohi, submitted, in reply, that to substantiate the allegation of instigation the plaintiff has not produced any other letter except X-3, referred to above, to indicate that defendant No, I had the knowledge or given its consent to the proposed deal. It might be that some one from Tokyo Sanyo Company (TOSAN), which is a different identity and has some technical assistance agreements with the plaintiff, which are not subject-matter of this suit, had the knowledge, but it has nothing to do with the present suit and the defendant No,
1. He further submitted that the plaintiff has not at all sought the approval from defendant No, 1 to negotiate the deal and transfer the alleged agency, which is subject-matter of two Memorandums herein. The allegation now made against defendant No, 1 that it terminated the agency under the said two Memorandums on the instigation of defendant No 2 is entirely baseless. He referred Annexure X-2, which is a telex dated 26-10-1985 sent by plaintiff Shamim Ahmad to defendant No, t wherein the plaintiff has paid tribute to defendant No, 1 for its fairness. I quote : "I refer to my TLX Nos. 1369/6-10-85 N and 1396/16-10-85 to which I have not received any favourable reply so far.
' Any way 1 plan to visit Japan personally to discuss/explain the present situation in detail and shall appreciate if you will let me know the date when I can meet you as without hearing my view you will not be able to do Justice as you have always been very fair N helped me grow in Sanyo business in Pakistan for which I have worked, extremely hard but due unavoidable circumstances we were in a deadlock with solid."
' In the above telex, reference has been made by the plaintiff to its previous communication dated 16-10-1985 which has already been referred to above and to a previous Telex dated 6-1U-1985 about which the plaintiff/complained that tney did not receive any reply from defendant No,
1. It is significant that in the letter dated 26-10-1985, quoted above, there is not a single word about the alleged instigation by defendant No, 2 The telex X-3, alio quoted above, is also silent about the alleged instigation of defendant No, 1 by defendant No,
2. Mr. A. K. Brohi referred to Annexures X-25, 31 and 32, as a background and submitted that the plaintiff had been taking little interest in the business of the sale of the products under the said Memorandums, which is evident from the following sale figures Rs, 1982 84,61,343.00 1983 72,13,542.00 1984 48,97,191.00 1985 3,12,126.00
33. Mr. Brohi also referred to a photostat copy of an order dated 8-1.1985 passed by the Collector Customs' and Central Excise, Rawalpindi in Case No, V-CUS (7) 129/84/485 by which the plaintiff was found guilty of certain offerenes under the Customs Act and. Was ordered to deposit an amount of Rs, 18,22,104.30 being the Customs duty and other taxes payable on the goods illegally removed by it from the warehouse at Islamabad. In addition, a penalty of Rs, 10,00,000 (ten lacs) was also imposed for violating the provisions of Customs Law. Mr. Brohi submitted that the shortage related to several items of Sanyo products which resulted and may result in future in the loss of reputation of defendant No, 1, as the plaintiff represents itself to be its agent. Reliance may be placed on the following observations of the Honourable Supreme Court in the above said case 1973 SCM R 555 which referred the case of Bolton Brothers & Co. Ltd. (1) for the proposition that "loss of reputation by the agent was considered to be a sufficient reason for putting an end of an agency on the part of the principal". I will not, however, dwell on this point any more, lest it may affect adversely the claim of the plaintiff at the time of trial of the suit for damages/compensation.
I would, however, like to add that Mr. Liaquat Merchant did not choose to say a word about the said order and its effect on the relationship.
34. Looking to all the circumstances and particularly the proximity of time that the alleged agency was terminated by flex dated 24-10-1985 and compliments for fairness were being paid by the plaintiff through its tlex dated 26-10-1985 to defendant No, I, I am not at all impressed by the arguments of Mr. Liaquat Merchant that the arrangement existing between the plaintiff and defendant No, 1 under the said Memorandum teas been terminated by defendant No, 1, in collusion with defendant No, 2 and is mala fide.
35. As regards the last point urged by Mr. A. K. Brohi that the suit is bad for non-joinder of Messrs Solid Corporation, Japan, which according to him, is a necessary and proper party, as all the supplies were made by the said Corporation to the plaintiff and not by defendant No, 1, be has referred to a number of Annexures, for instance, X-15, 17, 18, 19, 25, 31 and 32. On the other hand Mr. Liaquat Merchant referred to Annexures marked as K-56 to K-58 which show direct imports made by the plaintiff from defendant No, 1 of machinery and spare parts. Mr. Liaquat .Merchant has also relied on Annexure X-59 which is a letter dated 25-12-1984 addretsed jointly by defendant No, I and Solid Corporation to the previous agent. Liaquat Merchant further submitted that M/s. Solid Corporation is. In fact, a handling agent of concern of defendant No, 1, for making export to the Asian Zone. On the basis of the documents relied on by the learned counsel for the plaintiff and defendant No 1, the conclusion that one can arrive at is that the exports to the plaintiff were generally made through Solid Corporation and defendant No, I has insisted more than once that the dealings under the said Memorandum be made by and between the plaintiff and Solid Corporation and that the orders be placed by the plaintiff and Letters of Credit be established by it in favour of the said Corporation. What is the true relationship between defendant No, 1 and Solid Corporation cannot exactly be known without further evidence at the trial of the suit. Moreover, it has no bearing on the decision of the application under Order XXXIX, rules 1 and 2, C. P. C., and, therefore I do not feel it proper to express any opinion on the point urged by Mr. A. K. Brohi. The defendant No, 1 may, however, file a separate application under Order T. Rule 10, C. P. C. If so advised.
(1) AIR 1929 All. 37
36. For the foregoing reasons, I dismiss the plaintiff's application (C. M. A. 4736185) for temporary injunction.
37. It goes without saying that the expiration of opinion, on certain aspects of the case that was argued before me, is tentative for the sole purpose of granting or refusing the prayer made by the plaintiff in its application under Order XXXIX, rules 1 and 2, C. P. C. And it will not affect the merits of the Suit wnich will be beard and decided in accordance with law.