' The present appeal has been brought against the order dated 17-2-2001, passed by the learned Civil Judge, Lahore, whereby, an application for the grant of temporary injunction under Order 39, Rules 1 and 2 read with section 151 of C.P.C., in a suit for declaration, permanent injunction and damages filed by the respondent, has been allowed and the injunction in terms of the prayer made in the application, which reads as follows, has been granted:- "It is, therefore, most respectfully prayed that this august Court may be pleased to direct the respondents to continue to supply 7-Up concentrates as agreed between the parties vide agreement dated 31-1-1963 during the pendency of the suit and to refrain from all other acts which may impeach the fulfilment of the terms of the agreement."
2. Brief necessary facts of the case for the disposal of this appeal are, that the respondent/plaintiff filed a suit for declaration etc. Stating in the plaint that under the agreement dated 31-1-1963 (the bottling agreement). Between the parties, the respondent has exclusive perpetual rights to manufacture and sell the soft drink of the brand Seven-Up, for the territory covered thereunder. It may be pertinent to state here that though in the plaint, the bottling agreement has been briefly ascribed as franchise/licence agreement as well. But in paragraph No,23, it is unequivocally averred "that the threatened suspension of the franchise agreement is violative of section 202 of the Contract Act. The franchise agreement is obviously an agency with interest of the agent i,e, the plaintiff, who has made investments running into crores of rupees in the project, glass bottles in trade, advertisement and publicity, credit sales to the trade and institution will be struck-up".
3. Apart from, the paragraph reproduced above, and by taking into account the plaint as a whole, still it is mainly the case of the respondent, that on the basis of the bottling agreement, a relationship in the nature of an agency has been created between the parties. Due to the huge investments made by the respondent; the use of its experience; the dint of hard efforts made by the respondent in introducing the product in Pakistan, as pioneer/sponsors, the respondent has earned a name and a good will in the market, which is synonymous to the word 'Seven-up' in the social and financial set-up of the country. Thus, the respondent has acquired an interest in the property forming subject-matter of agency. On account of the above, it is the case of the respondent that such agency cannot be terminated/suspended in view of section 202 of the Contract Act.
' But with oblique and ulterior motives, which are detailed in the plaint; the appellants fictitiously raising the issue of quality standards, through a letter dated 30-10-2000, has suspended the supply of the raw material/concentrate, to the respondent, resulting in halt of its business. This letter/action, has been impugned in the suit, which according to the respondent, is illegal, without lawful authority, unilateral and is violative of the provisions of section 202 of the Contract Act.
Besides, the action has been taken without any show-cause notice and providing an opportunity of hearing to the respondent, thus on the basis of above, relief of temporary injunction as reproduced earlier has been claimed. It may be significant to state here that, in the addition, the respondent has also prayed for the decree for the award of the damages/compensation to the tune of Rs,963,047,184.
4. The application was replied by the appellants and the learned Civil Judge vide order dated 17-2- 2000, was pleased to accept the same in terms of the prayer thereof, mainly holding that the relationship between the parties is in the nature of,an agency and as the respondent by virtue of the bottling agreement has invested colossal amount of money, thus has acquired an interest in the property, which forms the subject-matter of agency, therefore, such agency cannot be terminated/suspended by the appellants because of section 202 of the Contract Act. Hence this appeal.
5. Mr. Umar Ata Bandial, the learned counsel for the appellants has attacked the impugned order, by arguing that there is no relationship of agency between the parties: there are two parts of the bottling agreement, one, the respondent was granted a mere licence by the concerned appellant to produce and sell Seven-Up in the assigned territory and second, the respondent is entitled to purchase the raw material/concentrate from the appellants, essential for the production of the beverage, which part is purely in the nature of sale/purchase of goods, governed by the law relating to sales of goods. The alleged violation of the bottling agreement in any of the two aspects, mentioned above, is not enforceable under the law; a suit for declaration in respect of contractual rights and obligations between the parties is not maintainable; because of the absence of agency, relationship between the parties, the provisions of section 202 of the Contract Act, are not attracted to the case in hand; as far as, the licence is concerned, by its very nature, a licence is revocable at the will of the licensor, particularly, in the instant case, when the respondent has failed to adhere to the standards set out by the appellants for the quality manufacture of the product: the appellants were justified to suspend the licence and stop the supplies of the raw material to the respondent.
Viewing the agreement from either of the two angles. The same is not enforceable in law, consequently. a decree for the perpetual injunction in terms of section 54(e) and (i) of the Specific Relief Act read with explanation to section 12 is impermissible: thus where a perpetual injunction cannot be granted, there is no question for the grant of a temporary injunction. It is further submitted, that admittedly, before the institution of the suit by the respondent, the appellants had suspended the supply of material/concentrate, therefore, by virtue of the provisions of Order 39, Rules 1 and 2 read with section 151 of C.P.C., a Court cannot grant a temporary mandatory injunction in the form of status quo ante, so as to compel the appellants to restart the supplies to the respondent. Lastly, it is contended that in order to maintain the quality of its product and to safeguard the name and reputation of Seven-Up, which trade mark is the property of the appellants; the appellants few years back, introduced a quality maintenance programme, which was internationally applicable. This programme was duly communicated to the respondent, who accepted the same and by conduct agreed to abide by the programme, however, despite repeated communications to the respondent pointing out the deficiencies in the quality and even placing the respondent on probation, a number of times, still there were complaints against the respondent in that regard. Ultimately, satisfied that the respondent has failed to abide by the quality maintenance programme, the appellants in order to protect their name, goodwill and interest, were constrained to take the action, which is permissible under clause 17 of the bottling agreement.
5-A. Khawaja Saeed-uz-Zafar the learned counsel for the respondent has supported the impugned order by arguing that the relationship between the parties having genesis in the bottling agreement, which essentially is in the nature of an agency. The respondent is one of the pioneers in the modern beverage Industry; has invested crores of rupees in establishing the manufacturing plant for the produce of the above product; substantial amount has been incurred. Upon the publicity; due to dint of hard labour and unmatched experience of the respondent, the product has been successfully promoted and introduced in Pakistan, where it was unknown before; colossal amount has been spent upon the purchase of the empty bottles; large and substantial amount is struck in the market because of certain credit, arrangement between the respondent and the wholesalers. All these investments and efforts have created an interest in the property which is subject-matter of agency between the parties, therefore, the agency is interminable as per the provisions of section 202 of the Contract Act. It is also submitted that under the Islamic Injunctions, the parties are required to abide by the promises made to each other. In the present case. An unequivocal promise has been made by the concerned appellant to the respondent to allow it to use the trade mark of Seven-Up, which agreement, according to its wording is in perpetuity; the respondent has not violated any of the terms of the agreement. Lame excuse of quality maintenance has been made to abortively justify the impugned action of the respondent which is otherwise mala fide. Reiterating his submission about the Islamic Principles it is argued that by applying the Islamic Injunctions, the bottling agreement, as also the provisions of the Specific Relief Act and the Contract Act, be read in the manner that the appellants should not be allowed to violate the promise of supplying the raw material/ concentrate to the respondent. On the questions of enforceability of the bottling agreement: the maintainability of the suit and the grant of mandatory temporary injunction, the arguments of the appellants' side have been rebutted and impugned order has been defended. It is submitted that the Courts in the facts and circumstances of the case, has ample jurisdiction to suspend the letter dated 30-10-2000, and once that is done, the consequences of restoration of supplies would automatically follow. Therefore, there is no question of the grant of any status quo ante in the matter. It may be pertinent to submit that the learned counsel for the respondent, without prejudice to the respondent's main plea as set out in the plaint, that the relationship between the parties essentially is in the nature of an agency.
Argued that the bottling agreement can reasonably be construed as conferring franchise rights upon the respondent, thus, where on the basis of a franchise agreement, which has been acted upon by the parties: certain substantial steps involving huge investments by the respondent has been made, such franchise can neither be suspended nor terminated. Immediately replying Mr. Umar Ata Bandial, has objected to the aforementioned plea on the ground that the respondent has not set out a case of franchise in its plaint and it is settled law that no one can be allowed to go beyond the scope of his pleading. He has relied upon Mst. Salima Bibi v. Mst. Halima Bibi 1994 SCM R 1858; City Bank v. Tariq Mohsin Siddiqi and others PLD 1999 Kar. 196; Abdullah v. Abdul Majid 1999 M LD 2670 and M. Younas v. Abdullah 1992 CLC 15. Instead of leaving this proposition for future discussion, in judgment, the objection raised by Mr. Bandial is hereby attended and is repelled, for two reasons, firstly, it can be seen from the contents of the plaint, that the respondent/plaintiff, though, briefly but in a number of paragraphs, has ascribed the bottling agreement as franchise agreement, therefore, it cannot be held that the present plea of the respondent's counsel violates the rule of law enunciated in the aforementioned Judgment. Secondly, the question of construction of an instrument is a question of law and it is the duty of the Court to interpret a document in its proper legal perspective and apply the correct law.
6. Coming back to the merits of the case, I have heard the learned counsel for the parties.
According to the case, mainly set up by the respondent in the plaint and during the course of arguing this appeal and the reason, which basically prevailed with the learned Civil Judge, is that there exists an agency relationship between the parties, which in view of the investment etc. Made by the respondent has created an interest in the property forming subject-matter of agency and therefore, is interminable by virtue of section 202 of the Contract Act. In order to ascertain the above fact, it is expedient to analyse the bottling agreement and the admitted nature of dealing between the parties thereunder. Under the bottling agreement, as explained by Mr. Bandial, the respondent has the permission of the concerned appellant to produce and sell Seven-Up in the assigned territory, but for the absence of such permission, the respondent has no right to manufacture or market the product. Thus it is necessary to find out the true purport and amplification of this permission, whether it is an agency relationship, or a licence, or a franchise and if it the later form, what are the rights and obligations of the parties and the governing law in this behalf.
7. First of all, I shall take up the primary plea of the respondent's side qua the agency. Section 182 of the Contract Act defines the agent and the principal to mean:-- An agent is one--
(i) who is employed by another (principal).
(ii) To do any act for another (principal) or
(iii) To represent another (principal) in dealing with third person.
From the above, it is clear that in effect an agent is the connecting link between the principal and third person---a sort of conduit pipe or an intermediary. This intermediary has the powers to create legal relationship between the principal and third party. He has competence to make the principal responsible .To the third person. He is an imperative bridge by crossing which, the third person can reach the principal to enforce his legal right or vice versa. The principal is liable to the third person for all the act and deeds performed, within the authority of agency, by his agent, as if those were personally performed by him. The agent necessarily and the principal in certain circumstances are liable to each other for accounts. If a so-called agent is not liable to the so- called principal for the submission of accounts, such as the profit and loss, he cannot be termed as agent; in laying this scale, my view are fortified by the following Judgments:-- ' Pakistan Paper Corporation Ltd. v. National Trading Company (NTC) Limited 1983 CLC 1695; Messrs Caltex Oil (Pakistan) Limited, Karachi v. Sheikh Rehan-ud-Din PLD 1958 (W.P.) Lah. 63: Messrs Rohtas Industries Limited v. State of Bihar AIR 1958 Patna 414 and Moti Lal Channoo Lal Vaish v. Golden Tobacco Company AIR 1957 Madh. Pra.
223.
8. After setting the above criteria, it should now be Judged, whether on the basis of bottling agreement and/or in the light of the admitted facts relating to such business dealings between the parties, brought to the notice of this Court, during the hearing of the appeal by both the sides, any agency is created.
' As per the bottling agreement and verbally explained by learned counsel for the parties, Seven-Up is a product, having trade mark, registered abroad in the name of one of the appellants, the appellant has the exclusive right to manufacture and sell the product throughout the world. The permission to manufacture and sell Seven-Up, in Pakistan within the assigned territory has been given to the respondent under the said agreement, but in the absence of the agreement, the respondent would have no legal authority to produce or market the product. Admittedly, in law a trade mark is a property which can be sold, however, it is not even the case of the respondent, that any such sale has been made in its favour. According to the agreement itself and construing it in the light of Chapter V of the Trade Marks Act, 1940, the trade mark rights have not been assigned to the respondent. Therefore, in the absence of either of the above two eventualities, the only third possibility is, the express permission given to the respondent to produce and market the product and as stated earlier without which, the respondent has no lawful authority to produce and sell Seven-Up bottles in Pakistan. Now whether this permission constitutes an agency. From the facts narrated below and the business dealings between the parties, explain to this Court, the conditions fixed for the criteria of an agency are not fulfilled. Kb, Saeed-uz-Zafar, learned counsel has not been able to show, if in any manner, any legal relationship through the respondent is constituted between the appellant or any third person; the appellants admittedly have no right or interest of any nature in the whole operational set of the respondent in Pakistan; the raw material is purchased by the respondent from the appellant against price and the propriety in the goods pass on to the respondent on the delivery; the respondent is not liable for accounts to the appellants; the product in Pakistan is being sold by the respondent as its own property, for the price fixed by the respondent, without any control of the appellant; the respondent is solely entitled to the profits and incurs losses if any; the respondent does not receive any commission from the appellant on account of the sale of the product; the respondent in no manner acts as intermediary, or a conduit pipe between the appellant and a third person. Therefore, testing the case on the criteria laid above, I have no hesitation to hold that the respondent is not an agent of the appellant within the purview of law of agency. The argument of the learned counsel for the respondent that being the owner of the trade mark, the appellants' in actions for torts, on account of the principles of vicarious liabilities are liable to the third party, therefore, the agency stands created has no force.
6. Before proceeding further to determine the true nature of relationship between the parties and legal effects thereof. As I have held that there is no agency, therefore, I would examine the question regarding the application of the provisions of section 202 of the Contract Act. In this behalf, suffice it to say that in order to attract the provisions ibid, it is sine qua non that agency inter se the parties should be in existence. But where there is no agency relationship, section 202 has no application.
Notwithstanding the above, Kh.Saeed-uz-Zafar, has also not been able to show as to how on the basis of investment etc. The respondent has acquired any interest in the subject-matter of the property, which in the present case is the trade mark Seven-Up and that such trade mark from part of the subject-matter of so-called agency. Therefore, the judgment reported as Muhammad Aref Effendi v. Egypt Air 1980 SCMR 580, heavily relied upon by him, has no application to the case in hand.
7. Coming back for the elucidation, as to what is the true relationship, inter se the parties, particularly in the light of the submission, made by the learned counsel for the respondent, in the alternative, that the bottling agreement confers 'franchise' upon the respondent and by its nature, a franchise agreement is irrevocable; until and unless the conditions laid down in the agreement for the termination are fulfilled.
8. The learned counsel for the respondent has made extensive reference to Words and Phrases, Permanent Edition, Volume 17, pages 694, 695, 699, 700 to 706, 712 and 714, the accumulative effect of these are, that a 'franchise' is a special privilege conferred by the Government on an individual which otherwise, does not belong to a citizen of the country as a common right and when franchise is accepted, it becomes a contract, irrevocable unless the right to revoke is expressly reserved. But, no law has been cited with regard to the concept and grant of franchise right by one private individual to another individual. However, franchise has been defined in the Black's Law Dictionary, 6th Edition at page 658, as follows:-- "A privilege granted or sold, such as to use a name or to sell product or services. The right given by a manufacturer or supplier to a retailer to use his product and name on terms and conditions mutually agreed upon.
' In its simplest terms a franchise is a licence from owner of trade mark or trade name permitting another to sell a product or serve under that name or mark. More broadly stated, 'franchise' has involved into an elaborate agreement under which the franchise undertakes to conduct a business or sell a product or service in accordance with methods and procedure prescribed by the franchiser and the franchiser undertakes to assist the franchisee through advertising, promotion and other advisory service. H & R Block, Inch. v. Lovelace, 208 Kan. 538, 493, P.2d, 205, 211. Term also refers to such business as owned by the franchisee. State and Federal Laws regulate business franchising. See also Franchised dealer."
This definition is most apt and akin to the facts and circumstances of the present case, therefore, I hold that broadly a 'franchise agreement' when entered into between private individuals, is a licence, which means a personal privilege granted by one person to another without creating any legal right in the property subject-mater of 'franchise'. It is a permission by the competent person/authority to another, to do an act which, without the permission would be illegal. The same is true for the grant of franchise for the purpose of trade, business or calling and is revocable at the will of the grantor.
9. It has not been shown by the learned counsel for the respondent, that on account of the franchise to produce and sell Seven-Up, which has been held to be in the nature of a licence, any vested right has been created in favour of the respondent, which cannot be terminated or suspended under any provision for law, in force in Pakistan.
10. Though under the Easements Act, 1882, the provisions qua licences relates to immovable property, yet those licenses can also be revoked at the pleasure of the licensor, unless falling within the purview of clause, (a) and (b) of section 60. The learned counsel for the respondent has failed to show if such provisions can be made applicable with respect to the licence granted to use the trade mark, which though a property in law, but is not immovable in nature.
11. Taking up the other part of the bottling agreement qua the supply of raw material/concentrate, suffice it to say, that the respondent is simply purchasing the goods from the appellants on the payment of the price and against the delivery of goods, this dealing between the parties is squarely covered by section 5 of the Sale of Goods Act, 1930. If the appellants even for mala fide reasons has refused to sell the goods to the respondent, at the best the respondent can sue the appellants for damages, but no specific enforcement of the agreement can be obtained under the decree of the Court, as per the provisions of section 56(f)(i) of the Specific Relief Act read with explanation to section 12 of the Act, consequently, when the perpetual injunction cannot be granted, it is settled law that there is no question for the grant of temporary injunction.
12. Dilating the above point, it may be stated, that according to the settled law, a temporary injunction can only be granted, if in a lis, the grant of perpetual injunction is permissible. Sections 54 and 56 of the Specific Relief Act, which supplements each other, are the provisions regulating the grant or refusal of a permanent injunction. Section 54 lays down the rule that a perpetual injunction may be granted to prevent the breach of an obligation existing in favour of the plaintiff whether expressly or by implication. When such obligation arises from the contract, the Court shall be guided by the rules and provisions contained in Chapter-II of the Act. The cases in which a perpetual injunction cannot be granted are those specified in section 56. According to section 56(f) and (I), a perpetual injunction cannot be granted to prevent a breach of a contract the performance of which would not be specifically enforceable or where equal efficacious relief can be obtained by any other usual mode of the proceedings except in the case of breach of trust.
Explanation to section 12 of the Act, circumscribes that 'until and unless contrary is proved the Court shall presume that a breach of a contract to transfer the immovable property cannot be adequately relieved by compensation in money and that a breach of a contract to transfer the movable property can be thus relieved.' The respondent's side has failed to prove on the record, that due to non-supply of the raw material/concentrate, the loss suffered by the respondent cannot be calculated in terms of money. Rather in the plaint the respondent has claimed the compensation by making exact calculation.
13. Briefly attending the question, whether the suit of the respondent under sections 42 and 56 of the Specific Relief Act, is competent. By referring to the following decisions, reported as Malik and Haq v. Muhammad Shamsul Islam PLD 1961 SC 531; Karachi Shipyard Works v. Muhammad Shakir Sheikh 1993 CLC 330; Shahid Mahmood v. KESC 1997 CLC 1936; Alavi Sons v. Government of East Pakistan PLD 1968 Kar. 222 and M. Farooq v. Suleman A.G. Panjwani PLD 1977 Kar. 88, it is held that, in case of a breach of a contract between the parties, only two remedies are available to the aggrieved person, either to seek specific performance of the contract, or to seek for damages. If the specific performance cannot be granted under the law, as a substitute, the plaintiff is not entitled to file a suit for declaration or for that matter a suit for perpetual injunction. Therefore, the suit of the respondent to challenge the action of the appellants in stopping the supply of the raw material was incompetent. Again, it is settled law that where the suit itself is not maintainable, no interim relief can be awarded.
14. As regards the issue raised by the counsel for the appellants that temporary mandatory injunction cannot be allowed as an interim relief, suffice it to say, that it is not an absolute rule of law, and in rare and exceptional cases, where the breach of obligation by the defendant is so patent, which floats on the surface of the record, causing immediate, pressing and irreparable injury to the plaintiff e.g. In the cases of easements of necessity or the severance of basic necessities of life by the public authority, such as illegal disconnection of electricity or water connection, the Court may while exercising its powers under section 94 read with section 151, C.P.C.
Grant a status quo ante. But in the case of breach of a contract, which agreement is not even enforceable under the law, the Court cannot and should not exercise its judicial discretion to create a situation, which has ceased to exist when the lis is commenced. Admittedly, the supply of raw material/concentrate was suspended by the appellants, before the institution of the suit, thus the Court in the facts and circumstances of the case was not justified to direct the sale of the goods to the respondent. In support of the above proposition reliance can be placed upon Islamic Republic of Pakistan through Secretary, Establishment Division, Islamabad and others v. Muhammad Zaman Khan and others 1997 SCM R 1508.
15. Now attending to the submission of the learned counsel for the respondent that the interpretation of bottling agreement between the parties, as also the provisions of various statutes, be made in the light of Islamic Injunctions, by applying the principles of 'reading in' and 'reading down', suffice it to say that, he has not been able to quote any verse of the Holy Qur'an or the Sunnah, according to which, some different interpretation be placed to the above-mentioned private or legal instruments. Reference by him to Sura-e-Maiyda, only requires the parties to abide by their promises, but it does not enunciate, that in case of breach of promise, necessarily the specific enforcement should be directed and that the remedy of seeking compensation is not available to the aggrieved party. Therefore, the argument of Kh. Saeed-uz-Zafar, has no force and it is hereby repelled.
' Before parting, it may be added that I have consciously avoided to comment on the allegation of poor quality made by the appellants, which have been refuted by the respondent, because such fact needs an inquiry and in my view this appeal can be decided without dilating upon this issue.
In the light of what has been stated above, I do not find that the respondent has been able to make out a prima facie case, and the principles of irreparable loss and balance of convenience are in its favour. Therefore, by allowing this appeal, the impugned order of the trial Court dated 17-2-2001, is set aside and the application for the grant of temporary injunction filed by the respondent is dismissed. No order as to costs.