1. The plaintiff has filed this application under Order 39, Rules 1 and 2, C.P.C. Read with section 151, C.P.C., praying therein to restrain the defendants, their agents, and privies from effecting exports of its medicines/drugs to Sudan, Kenya, Ugenda, Tanzania, Nigeria and Yeman or any other African country for which the plaintiff is the agent/distributor and promotor, and further be restrained from manufacturing the chest and lung Tablets which was developed and manufactured exclusively for the plaintiff.
2. Briefly. Stated the facts as disclosed in the plaint are that plaintiff's firm is engaged in the business of international trade and export of pharmaceutical products, the defendants who is the manufacturer of drug/medicines, appointed the plaintiff as the sole exporting, distributing and marketing agent in several countries i.e, Sudan, Kenya, Ugeanda, Tanzania and Ethopoia and promoters of specialized drug also in Nigeria for Africa and for Yemen in the Middle East. That the plaintiff acting as the sole agent of the defendant employed several skilled persons for creating a market for the defendants products. The plaintiff in promoting the business of the defendant acquired an irrevocable interest in the said business and accordingly the plaintiff was ranked as a partner. That the plaintiff has been dealing with the defendant's products in the African markets for over a decade. The plaintiff through its sole efforts did export of several million for the defendant involving investment of substantial funds and time securing the African order.
3. That when the plaintiff established various markets for the defendant's products mainly in Africa, the defendant acting in breach of the understanding and contractual obligations, terminated the plaintiff's sole Agency arbitrarily vide letter dated 28-5-1995 and 30-5-1995. The plaintiff further stated that the defendant was under obligation not to sell its products under its own brand name or any other brand name directly in any country for which the plaintiff was the sole agent and distributer. That the defendant began to exclude the plaintiff from the operative arrangement and in various region sought its substitution. The . Defendants at the crucical stage commenced direct negotiations with the local importer M.S. Bandar Chemicals. The plaintiff thereafter was kept away from the said market at the instance of the defendant. The plaintiff had upon formal appointment as agent for Kenya engaged the services of a pharmaceutical consultant in Kenya for a period of 15 months so as to cause the registration of the defendant's products. The defendant unilaterally discontinued the supply of his products to Kenya through the plaintiff. The plaintiff further averred that with regard to the Chlorine injections and chest and lung drug the plaintiff sent several letters to the defendant from time to time, to supply the goods so as to meet the shipping schedule as per the requirement of the buyers. The defendants caused export/import licences stood expired. These resulted in irreparable loss of business credibility of the plaintiff in the African markets.
4. That the plaintiff had also sought the exclusive manufacturing of chest and lung drug, a product especially explored by the plaintiff for the Nigerian Markets. The expenses for the manufacturing of punches and the design bones finalizing and exploring the Nigerian Market was done at the exclusive cost of the plaintiffs.
5. That on account of the mala fide and fraudulent aims and objectives of the defendant, the plaintiff and its members have suffered both general and special demages actionable under tort.
The plaintiff in the suit prayed for: (a) a money decree of Rs, five millions and additionally (b) damages cumulatively at Rs, seventeen million for the losses suffered directly and indirectly by the plaintiff. (c) A permanent injunction.
6. Alongwith the plaint the plaintiff has filed a copy of the alleged agency agreement for Sudan dated 10-5-1994 on as Annexure P. Annexure P/1 is the letter written by the defendant to the plaintiff, dated June 11,1994 confirming that the plaintiff will represent the defendants as sole Export Agents for East Africa (Kenya, Uganda and Tanzania) In this letter price of the drugs are also given, it is also mentioned in this letter that the medicines purchased by M/s. Royal Multipurpose Karachi will be on cash payment basis. Annexure P-3 is the letter under which the sole agency of the plaintiff was withdrawn by the defendant.
7. The defendants has filed its counter-affidavit and has denied that the plaintiff was sole agent.
According to the defendant the plaintiff from time to time like other trading house procured and purchased quality pharmaceuticals products manufactured by the defendant for its own economic pursuits and still the plaintiff is procuring and purchasing pharmaceutical products of the defendant for export and for local consumption. The defendant further stated that on 10-5-1994 the plaintiff was merely nominated as a commission agent in an agreement between the defendant and one of the defendant's customer in Sudan, as is evident from Annexure P to the plaint, and so also the plaintiff was appointed sole export agent for East African countries. It was specifically stipulated that the plaintiff shall purchase all medicines from the defendant on cash basis. The defendant further stated that the plaintiff has no right in present or in future under Annexures P, P-1 to the plaint as the arrangement with the plaintiff was revoked and withdrawn as far back as on 28-5-1995. It is also denied that the alleged agreement conferred any rights or any interest as alleged and no agency coupled with interest, was created. The case of the defendant is that the plaintiff was an ordinary customer of the defendant's products and in that capacity the plaintiff used to purchase the drug on cash payment and used to supply the same to various countries.
8. It is also denied that the defendant is under any obligations not to sell its drugs under its own brand and or any other brand directly in any country for which the plaintiffs was the distributor. It is further stated by the defendant that the alleged agency even otherwise was revoked more then 18 months back as such the plaintiffs cannot ask any relief in this respect.
9. In this case ad interim order was passed in favour of the plaintiff as such the defendant has also filed an application under Order 39, Rule 4, C.P.C.
10. I have heard the learned counsel for the parties. The learned counsel for the plaintiff argued that he was the sole agent appointed by the defendant for African and Middle. East Countries and due to its hard work and huge expenses, the plaintiff established market for the products of the defendant. The agency of the plaintiff was coupled with interest which the defendant has illegally terminated vide letter dated 28-5-1995, without any prior notice and without assigning reasons. He further argued that by virtue of having sole agency, the plaintiff claimed territorial rights. He further argued that since no other person has been appointed in place of the plaintiff as a sole agent for Africa and Middle East, no inconvenience is to be caused to any 3rd party. He also relied on sections 182, 201 and 202, of the Contract Act and argued that if that agent had interest in the property the principal can not terminate the agency. He has relied upon several cases including PLD 1986 Karachi 234, PLD 1987 Karachi 112, PLD 1984 Karachi 194, 1980 SCMR 588 and argued that the agency of the plaintiff which was coupled with interest cannot be revoked unilaterly and in view of the facts of the case, the plaintiff has a prima case and balance of convenience lies in its favour and the plaintiff shall suffer irreparable loss if injunction as prayed is not granted.
11. On the other hand the learned counsel for the defendant argued that the suit filed by the plaintiff is not maintainable as no relief for declaration has been asked for. He further argued that Annexure P is between Tabros Pharma and Yeshfin drugs and Chemicals Khurtom, Sudan and not with the plaintiff. He further referred to clause 11 of this agreement and argued that for products imported directly by party B, commission at the rate of 7% was to be paid to the plaintiff. He further argued that according to the plaintiff the agency had been terminated on 28-5-1996 but present suit has been filed by the plaintiff after about a year and during this period that plaintiff purchased drugs from the defendant and exported the same. There is no restriction on the plaintiff to purchase drugs from the defendants, the plaintiff to purchase drugs from the defendants, the plaintiff is free to purchase and export the drugs. Further contention of the learned counsel was that the plaintiff in the suit has not prayed that the cancellation of the alleged agency was illegal and that the plaintiff continues to be the agent of the defendant. He further argued that the defendant is manufacturing various drugs and similarly it is manufacturing Chest and Lungs Tablets also. The plaintiff has failed to show that it has any proprietary rights in respect of these tablets. The plaintiff has been dealing with the other companies and it is incorrect that the plaintiff is dealing only with the defendant. His further contention was that under Annexure P-5 the plaintiff had withdrawn manufacturing of Chest and lungs Tablet by the defendant. According to the learned counsel for the defendant the alleged agreement was of a personal nature which cannot be specifically enforced under section 21 of the Specific Relief Act and the plaintiff can adequately be compensated, if he proves the same. According to him mere investment is no sufficient to show that the agency was coupled with interest.
12. For the purpose of deciding an application under Order 39, Rules 1 and 2, C.P.C., the principles to be considered are established of a prima facie case by the plaintiff, balance of convenience and irreparable loss. In the present case, the plaintiff used to purchase drugs from the defendant and used to supply the same in African and Middle East Market. The plaintiff used to pay for the drug so purchased from the defendants. For deciding the claim of the plaintiff tentatively that he had an agency and it was coupled with interest sections 182, 202 and 205 of the Contract Act will be relevant which are as follows: "182. 'Agent' and 'principal' defined. An 'agent' is a person employed to do any act for another or to represent another in dealings with third person. The person for whom such act is done, or who is so representative, is called the 'principal'.
202. Termination of agency where agent has an interest in subject-matter. 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 an express contract, be terminated to the prejudice of such interest.
205. Compensation for revocation by principal or renunciation by agent. Where there is an express or implied contract that the agency should be continued for any period of time the principal must make compensation to the agent, or the agent to the principal as the case may be for any previous revocation or renunciation of the agency without sufficient cause."
13. For the decision of an interim application in hand it will be necessary to refer to above quoted sections. Section 182 of the Contract Act says that agent is a person employed to do any act for another or to represent another in dealing with third person. Agent has power on behalf of the principal to deal with third person so as to bind the principal. Under section 202 of the Contract Act agent should have an interest in the subject-matter.
14. In the present case as mentioned earlier the plaintiff used to purchase the drugs from the defendants on payment as any other customer and used to export the purchased drugs to the African and Middle East Countries. The plaintiff was entitled to have itself the entire sale proceeds.
The drug/medicines purchased by the plaintiff from the defendant used to become the property of the plaintiff. It is not the case of the plaintiff that he used to export the product of the defendant for sale in the foreign countries and used to pay the proceeds to the defendant or used to account for with regard to such sales.
15. Apparently the case as set up by the plaintiff does not fall under section 202 of the Contract Act.
The finding is interim for the sake of deciding the present application only. The agency, if there was any, was cancelled without prior notice and without assigning sufficient cause which fact is supported by Annexure P/3 to the plaint.
16. As I have observed, tentatively that the products of the defendant used to be purchased by the plaintiff, which after the purchase used to become the exclusive property of the plaintiff as such section 202 of the Contract Act shall have no application for the reason that the plaintiff used to export the drugs/medicines of which he himself was the exclusive owner whereas the defendant after sale of the products to the plaintiff had no right or lien over the said goods. Section 202 of the Contract Act visualizes the situation where actual owner of the subject-matter would be the principal but some interest with the authority of the principal would pass on to the agent.
17. The learned counsel for the plaintiff has cited several cases including PLD 1986 Kar. 234 Sanyo's case, 1980 SCMR 588 Egypt Air Case, 1994 CLC 724, and PLD 1987 Kar. 112 (Zubair Ahmed v. Pakistan State Oil Co. Ltd. And another).
18. The defendant's counsle has also cited the cases reported in 1973 SCMR 555 (West Pakistan Industrial Development Copropration Karachi v. Aziz Qureshi) and Sanyo's case reported in PLD 1986 Karachi 234, PLD 1983 SC 344.
19. In the case reported in PLD 1986 Karachi 234 (M/s. World Wide Trading Company v. Sanyo Electric Trading Company and another). The injunction application filed by the plaintiff was dismissed and it was observed that 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 investment 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 exclusion of all other but such investment does not necessarily fall within the scope of "interest" as mentioned in the said section".
20. The case reported in 1980 SCMR 588, (Muhammad Arif Effendi v. Egypt Air) does not apply to the facts of the present case as in that case the plaintiff/agent had to furnish accounts to the defendant according to the agency agreement and the Hon'ble Supreme Court directed the petitioner to render accounts for six months i.e, July to December, 1979 to the Nazir of the High Court and thereafter, within period of fortnight furnish Bank guarantee for the account found due by the Nazir.
21. The cases cited by the plaintiff are distinguishable for the reasons that in the present case as observed earlier the plaintiff used to purchase drug/medicine from the defendant on cash basis and as an exclusive owner of the purchased drug/medicine, he used to export the same.
22. The essence of the sale is transfer of title of the goods for price paid or to be paid. The transferee in such case becomes liable to the transferor of the goods as a debtor for the price to be paid and not as an agent for the proceed of the sale. On the other hand the essence of the agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as property of the principal who continues to be the owner of the goods and who is, therefore, liable to account for the proceeds. For the purpose of grant of injunction apart from the ingredients of there being prima facie case in favour of the plaintiff, the other important ingredient i.e, balance of convenience and irreparable loss have also to be considered. The defendant who are manufacturer of drug if restrained to export the same to the African and Middle East countries, it shall suffer irreparable loss and balance of convenience also lies in its favour. According to the contentions of the plaintiff counsel who relying upon Annexure P.2 argued that this agency agreement cannot be revoked unilaterly the plaintiff under the circumstances of the case cannot bound down the defendant to supply it, the drugs which the plaintiff may ask it to supply, under these circumstances, as the defendant is not bound to continue to supply the drugs to the plaintiff according to the plaintiffs' demand, the injunction asked for by the plaintiff will become redundant and as such cannot be granted.
23. In AIR 1967 SC page 181 (Gordon Woodroffe & Co. (Madras) Ltd., v. Shaikh M.A. Najid & Company) it has been held: ' "The first question presented for determination in this case is whether the defendants were acting as del cruder agents of the plaintiff or whether the defendants were outright purchasers of the goods supplied to them by the plaintiff. In the approach to this question it is necessary to notice the distinction between a contract of sale and a contract of agency. The essence of sale is the transfer of the title to the goods for price paid or to be paid. The transferee in such case becomes liable to the transferor of the goods as a debtor for the price to be paid and not as agent for the proceeds of the sale. On the other hand, the essence of agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods and who is, therefore, liable to account for the proceeds.
The true legal relationship between the parties in the present case has, therefore, to be inferred from the nature of the contract, its terms and conditions and the nature of respective obligations undertaken by the parties."
24. In this reported case there were 101 contract forms under which goods were purchased for export to London and the price of the goods purchased was fixed in the contract. The Supreme Court in this case came to the conclusion that the defendant was not an agent but was simply a purchaser though in this case the plaintiff used to furnish accounts.
25. The plaintiff's counsel in this case has filed affidavit-in-rejoinder and alongwith it has filed photo copies of certain documents which were neither filed alongwith the plaint nor were mentioned in the plaint.
' The parties should file all the documents alongwith their pleadings and if for any reason they could not file certain documents, then in/that case they must give reasons for not filing the same in the pleadings. The documents filed alongwith the affidavit-in-rejoinder, which documents neither having been filed alongwith the pleadings nor mentioned therein could not be looked into without the leave of the Court.
' The plaintiff's counsel have annexed alongwith the affidavit-in-rejoinder letter/certificate of the defendant dated 2-1-1993, another letter/certificate dated 26-11-1990 and tried to argue that the plaintiffs were appointed as sole export agent under these two documents. These documents were neither filed nor relied upon by the plaintiffs in the plaint. Further, these documents were written much prior to Annexure P and P-1 to the plaint, on the basis of which the plaintiff has claimed the agency in his favour. These documents, therefore, do not advance the case of the plaintiff in any manner.
27. If the plaintiff's alleged agency agreement has been terminated by the defendant illegally then in that case the plaintiff can adequately be compensated by means of grant of damages, under the circumstances of the case after the trial of the suit.
28. As submitted by the defendant's counsel the plaintiff after the termination of the alleged agency agreement have been purchasing drugs from the defendants and they are free to continue such purchases on cash basis, for consumption in the local market as well as for the Middle East and African countries. Assessing the contentions of the parties counsel and perusing the documents filed by them, tentatively without affecting the merit of the case I am of the opinion that the plaintiff is not entitled to injunction as prayed, the injunction application is, thus, dismissed.
29. In view of the order passed on C.M.A. No,6752 of 1996) the present application (C.M.A. No, 7252/1996) has become infructuous and accordingly the same is dismissed.