Suit No.1337 of 1993

20th September, 2010

Petitioner Counsel: Mr. N. DINKAR RAO
Respondent Counsel: Mr. S. MALIK,Mr. SANTOSH MISHRA , Mr. K. G. SINGHANIA,M/s. Singhania & Co.

Cases Cited:
British India Steam Navigation Co. Ltd. Vs. Shanmughavilas Cashew Industries, (1990)3 SCC 481 [Para 24]
A.B.C. Laminart Pvt. Ltd. Vs. A.P. Agencies, Salem, (1989)2 SCC 163 [Para 25,25,A]
M/s. Angile Insulations Vs. M/s. Davy Ashmore India Ltd., (1995)4 SCC 153 [Para 25]
Rhodia Ltd. Vs. Neon Laboratories Ltd., AIR 2002 Bom 502 [Para 26]
Madholal Sindhu Vs. Asian Assurance Co. Ltd., AIR 1954 Bom 305 [Para 61]
Krishna Dayal Vs. Emperor, AIR 1946 All 227 [Para 61]
Sir Mohammed Yusuf Vs. D., AIR 1968 Bom 112 [Para 61]
Ramji Dayawala & Sons (P.) Ltd. Vs. Invest Import, AIR 1981 SC 2085 [Para 61]
Om Prakash Berlia Vs. Unit Trust of India, AIR 1983 Bom 1 [Para 61]

JUDGMENT

JUDGMENT:- The parties have entered into contracts for the sale and distribution of the goods and equipments of the Defendants in India through the Plaintiff. The Plaintiff carries on business in India and the Defendants carry on business in Italy. The initial contract between the parties was admittedly executed on 6.10.1978. The Plaintiff was appointed the exclusive agent of the Defendants for India thereunder. It is the Plaintiff" s case that the contract was entered into in Mumbai inasmuch as the Plaintiff accepted the Defendants" offer in Mumbai. The Plaintiff was to be granted 8% commission on the price of the products sold. The parties admittedly amended their contract on 9.1.1985 under which the Plaintiff was to be paid 8% commission even on supplies of spare parts of the equipments and machines of the Defendants sold in India. It is the Plaintiffs case that contract was also accepted in Mumbai and hence entered into at Mumbai.

2. The Defendants cancelled the said contract on 27.9.1990 with effect from 31.12.1990 by giving the Plaintiff the required three months notice under the contract between the parties. The Plaintiff claims that is not a valid termination binding on the Plaintiff.

3. After the termination of the contract with the Plaintiff, the Defendants entered into a licence agreement with one M/s. Gremach India Ltd. The Plaintiff has taken exception to the appointment and claimed its commission.

4. The parties entered into certain negotiations. It was agreed that the Defendants would supply to the Plaintiff one machine called CMM SWIFT at concessional price to compensate the Plaintiff. The parties agreed that the initial Agreement dated 6.10.1978 would be cancelled and substituted by a fresh agreement. The Defendants were to supply the machine at concessional price. The Plaintiff claims to have entered into the second agreement with the Defendants on 29.10.1990 in place of the Agreement dated 6.10.1978 amended by the Agreement dated 9.1.1985. This would constitute a novatio between the parties. The Plaintiff contends that agreement was also entered into and concluded in Mumbai since the offer of the Defendants was accepted by the Plaintiff in Mumbai. The machine to be supplied was of DM 68,500/- to be supplied at the concessional price of DM 25,000/-, instead thus compensating the Plaintiff to the extent of DM 43,500/-. The Plaintiff contends that this difference in price is arbitrary and unilateral.

5. The Defendants have issued their invoice dated 30.11.1990 for the machine CMM SWIFT for '25,000/-. The Plaintiff contends that the machine was technically defective. The Plaintiff was required to spend DM 55,500/- for availing the banker's credit facility at additional interest and bank charges and by way of custom duty for clearance of the said machine. The Plaintiff claims to have suffered the loss of DM 1,24,000/- being the lesser price of DM 43,500/- plus the cost incurred of DM 55,500/- thereon. The Plaintiff claims that it got the damaged machine surveyed through the surveyors F.D. Hard Castle & Co.

6. It is the Plaintiffs case that the Defendants agreed to replace the machine excluding the electronic control parts called Tutor System. The parties negotiated. The Defendants offered to pay the DM 15,000/- to the Plaintiff as compensation for the defective machine. This was to be recovered by the Defendants through the Insurance Company. The Plaintiff found further defects upon taking delivery of the machine and it claims that the machine should be replaced and the price refunded.

7. The Defendants terminated the agency of the Plaintiff once again on 22.5.1992. The Plaintiff claims that termination is also invalid and not binding on the Plaintiff. The Plaintiff further claims that the Defendants had pre-planned the cancellation of the original exclusive agency agreement with the Plaintiff dated 6.10.1978 by substituting that with the second Agreement dated 29.10.1990 without the intention to perform that agreement also.

8. The Plaintiff takes exception to the appointment of M/s. Gremach India Ltd. as the Defendants' agents in India upon the termination of the Plaintiff's contract and claims commission in that behalf.

9. The Plaintiff further claims that it has been deprived of its payment and commission in respect of various parties with whom it had entered into contracts but could not supply the Defendants' equipments, which are enumerated in paragraph 16 of the Plaint, due to the termination of the Plaintiff's agency and the agency of M/s. Gremach India Ltd.. The Plaintiff, therefore, has sued for recovery of various amounts based upon the contract between the parties upon the alleged wrongful termination thereof and for accounts from the Defendants of the equipments sold in India through the other agent M/s.Gremach India Ltd.

10. The Plaintiff has amended the Plaint to claim higher amounts after the evidence came to be recorded upon considering calculation of the exchange price in respect of the amounts upon considering the exchange rate. The Plaintiff claims interest at the rate of 24% per annum on the amounts claimed.

11. The initial case of the Defendants is that this Court has no territorial jurisdiction to try the suit. The Defendants contend that the contract was entered into in Turin, Italy and that the parties specifically agreed to recognise the exclusive competence of Turin High Courts in respect of all disputes and controversies between the parties.

12. Written Statement of the Defendants is essentially of denial of the Plaintiff's claim. The appointment of the Plaintiff as exclusive agent in India under the contract dated 6.10.1978, as amended on 9.1.1985 as well as the later contract between the parties substituting the said contract on 29.10.1990, has been admitted. The cancellation of the initial contract dated 27.9.1990 has also been admitted. The supply of the machine CMM SWIFT to the Plaintiff at the concessional and discounted price of DM 25,000/- is admitted.

13. The Defendants contend that the Plaintiff did not fulfill the contractual obligations and achieved poor results of the sales in India leading the Defendants to terminate the contract. The Defendants deny their liability for defective supply of the machine CMM SWIFT or their entitlement to appoint another agent under the licence agreement with M/s.Gremach India Ltd.

14. The pleadings between the parties show that the contracts entered into, amended, cancelled and reentered into by the parties are admitted. These documents would be required to be interpreted and construed as admitted, written documents between the parties. The oral evidence, which may be further than the evidence under the written agreement, would, therefore, necessarily have to be excluded under Section 91 of the Indian Evidence Act.

15. The Plaintiff, of course, should have to prove the defective machine CMM SWIFT supplied by the Defendants and the loss and damages suffered therefrom. Similarly the Plaintiff shall have to prove how the Plaintiff suffered loss and damage by the Defendants' wrongful termination of the second agreement on 22nd May, 1992 and the losses suffered by appointment of another agent wrongfully by the Defendants.

16. Based upon the pleadings between the parties, Justice S. J. Kathawalla framed the following issues on 12.1.2009 which are answered as follows:-

(1) Whether the Defendants prove that this Hon'ble Court has no jurisdiction to entertain and try the suit. - Yes

(2) Whether the Defendants prove that they have validly terminated the agreement dated 29.10.1990. - Yes.

(3) Whether the Plaintiff proves that the Plaintiff is entitled to claim the dues in respect of commission under the agreement dated 6.10.1978.

(4) Whether the Defendants prove that the agreement dated 6.10.1978 was superseded by the agreement dated 29.10.1990. - Yes.

(5) Whether the Plaintiff proves that it is entitled to claim from the Defendants the amount as set out in the schedule as per Exh.K to the Plaint. - No.

(6) Whether the Plaintiff is entitled to interest on the principal amount and if so, at what rate ? - No.

(7) What order and judgment ? - As per final order.

The claim under issue No.(3) above relates inter alia the purchase of one machine called CMM SWIFT in respect of which the Plaintiff has claimed damage for defects. Hence issue No.(3) is altered to include such claim as follows and is answered as follows:

(3) Whether the Plaintiff proves that the Plaintiff is entitled to claim the dues in respect of commission under the Agreement dated 6.10.1978, including the claim for damages for defects in the CMM SWIFT machine supplied to the Plaintiff. - No.

16-A. Though the issue of jurisdiction would be required to be tried as a preliminary issue under the provisions of Order 14, Rule 2 of the Code of Civil Procedure, the parties have, perhaps needlessly, led evidence on and contested all the issues. The oral evidence between the parties is not only with regard to the damages suffered by the Plaintiff which would be required to be proved by the Plaintiff upon the termination of the Agreement dated 29.10.1990 but also with regard to what transpired between the parties upon it having entered into the initial Agreement dated 6.10.1978 followed by the novatio between them under the Agreement dated 29.10.1990. That part of the evidence is wholly irrelevant and need not be considered. Only such part of the evidence as would require the Defendants to prove the termination of the agreement and the loss and damage suffered by the Plaintiff, if any, would be required to be considered. Therefore, the documentary evidence between the parties of what transpired between 6.10.1978 and 29.10.1990 would also be irrelevant for the consideration of the issues in this case. The two Agreements dated 6.10.1978 and 29.10.1990 admittedly executed by the parties would, however, govern their relationship until the valid termination of the last of the agreement. The correspondence between the parties that ensued resulting in the termination and consequent upon it would also be required to see its validity or otherwise. The oral evidence which goes further than what the parties contended in writing by way of letters, telexes, etc. would also require to be excluded under Section 91 of the Evidence Act and such oral evidence would not be considered.

17. It may be mentioned that the correspondence between the parties reflects true decent businesslike approach of the Defendants on more occasions than one in amicably resolving and settling the disputes that arose between the parties whilst maintaining their stand with regard to the validity of their actions and whilst taking exception to the Plaintiff" s contentions with regard to the termination of the contracts which the Defendants sought to cancel. It may be mentioned that contract being of a commercial nature and the parties having negotiated their positions between the execution of the aforesaid two agreements must be taken to have acted as prudent businessmen and further to have taken care of their respective positions at the relevant time. The consideration, appreciation and construction of the correspondence between the parties, pursuant to the agreement entered into by them, would be a pointer to this fact.

18. The Plaintiff has led oral evidence of its Chairman. The Defendants have not led any oral evidence.

19. Issue No.(1) Re : Territorial jurisdiction:

The contract dated 6.10.1978 marked Exhibit-B in evidence relating to the exclusive agency for India is in the form of a letter issued by the Defendants on their letterhead and addressed to the Plaintiff. It is signed by the Sales Director of the Defendants and counter-signed by the Plaintiff for acceptance. The letter is addressed to the Plaintiff in India. The Plaintiff, therefore, accepted the same in India. The Defendants carry on business in Italy. The letter does not show where the parties signed the contract. The Plaintiff" s acceptance would have to be communicated to the Defendants. Such communication would be in Italy, unless otherwise shown. The acceptance of the proposal would be by the act, by which the acceptor would communicate the acceptance. Such communication would be complete as against the proposer when the acceptor puts it in the course of transmission to the proposer and as against the acceptor when it comes to the knowledge of the proposer. The law relating to the acceptance and its communication is contained in Sections 3 and 4 of the Indian Contract Act, the relevant part of which runs thus:-

"Section 3. Communication, acceptance and revocation of proposals. - The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.

Section 4. Communication when complete. - The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made:

The communication of an acceptance is completeas against the proposer, when it is put in the course of transmission to him, so as to be out of the power of the acceptor;

as against the acceptor, when it comes to the knowledge of the proposer."

19. The Plaintiff accepted the proposal of the Defendants under the letter dated 6.10.1978 constituting the initial contract between the parties. The signature of the Plaintiff on the letter shows the Plaintiffs intention to communicate the acceptance. When the Plaintiff puts it in the course of transmission, it would be complete as against the Defendants. When it comes to the knowledge of the Defendants it would be complete as against the Plaintiff.

20. The cross-examination of the Plaintiffs witness shows that the first Agreement dated 6th October, 1978 was typed and prepared by the Defendants and signed in Italy and then sent to India to be countersigned by the Plaintiff.

21. The novatio between the parties admittedly executed on 29.10.1990 is in similar terms. However, it is similarly executed on the letterhead of the Defendants signed by the Defendants and separately executed on the same day on the letterhead of the Plaintiff and signed by the Plaintiff. The cross-examination of the Plaintiff shows that the second Agreement dated 29th October, 1990 was prepared by both the parties on their respective letterheads. The Plaintiff could not have kept the signed letters with itself. These letters had to be sent to the Defendants to show the Plaintiffs countersignature/signature on their own letterhead. The Defendants being in Italy, they had to have been sent to Italy. The contract could have only then been completed. The contract could never have been completed in India or communicated to the Defendants in India. Hence the contract was completed in Italy and only the Courts in Italy would have territorial jurisdiction. The Courts in India cannot have such territorial jurisdiction.

22. Clause-16 of the letters dated 6th October, 1978 and 29th October, 1990 constituting the agreement between the parties thus signed by them shows that the parties recognised the exclusive competence of Turin High Courts for all the disputes and controversies which may arise between them.

23. The Plaintiff, therefore, expressly submitted itself to the exclusive jurisdiction of the Courts in Italy under the agreements admittedly signed by it. The reading of the clause of the recognition of the exclusive competence of the Courts in Italy shows the exclusion of the jurisdiction of any other Courts of any other countries by the parties to the contract.

24. It has been held in the case of British India Steam Navigation Co. Ltd. Vs. Shanmughavilas Cashew Industries & ors., (1990)3 SCC 481 that when the parties agreed that disputes would be determined by a certain Court to the exclusion of the jurisdiction of the courts in other countries, the parties would be bound by the jurisdiction clause to which they have agreed unless there is some strong reason to the contrary. Recognition of the exclusive competence of the Turin High Courts would essentially exclude the competence of other High Courts. This, therefore, shows that the parties intended to confer jurisdiction only upon the Turin High Courts. Consequently, they would be bound by such jurisdiction clause.

25. This would be a stark distinction from what was held in the case of A.B.C. Laminart Pvt. Ltd. & anr. Vs. A.P. Agencies, Salem, (1989)2 SCC 163 in which case though the Defendant was in Salem the parties agreed that dispute would be subject to Kaira jurisdiction. There was no exclusivity in such submission. The clause of the contract between the parties relating to the territorial jurisdiction of the Courts was thus:-

"Any dispute arising out of this sale shall be subject to Karia jurisdiction."

The parties in that case did not agree that it would be exclusively subject to Kaira jurisdiction or that only the Courts in Kaira would have jurisdiction. It was observed that an agreement, which ousts the jurisdiction of the Court absolutely, would be contrary to public policy and hence, void under Section 23 of the Indian Contract Act, though the parties can agree as to the jurisdiction to which their dispute would be subject. It was also observed that jurisdiction would depend upon the situs and the cause of action that arises under the contract. A contract making it subject to one jurisdiction would exclude the jurisdiction of the other Courts. With regard to the exclusion of the jurisdiction of the Courts, it was further observed thus:-

"As regards construction of the ouster clause when words like 'alone, only, exclusive and the like have been used there may be no difficulty."

Consequently, it was held that if out of two jurisdictions one was excluded, it would not absolutely oust the jurisdiction of the Court and, therefore, would not be void against the public policy and would not violate Section 23 and Section 28 of the Contract Act.

The clause between the parties in this suit submits themselves to the exclusive competence of the Turin High Courts. The Defendants carry on business in Turin, Italy and, therefore, Turin would be one of the two jurisdictions between the parties. In fact, the contract having been entered into by the Plaintiff's acceptance which had to be communicated to the Defendants who were carrying on business in Turin, Italy, would be complete as against the Plaintiff itself only when it would be known and received by the Defendants in Turin, Italy. Turin Courts otherwise would have jurisdiction and hence, the parties recognised exclusivity of the competence of the Turin Courts to try their dispute, which is at least one of the two jurisdictions available to the parties. The contract of submitting themselves to only that jurisdiction is valid, binding and not against public policy and must be upheld and enforced.

25-A. Consequently, in the case of M/s. Angile Insulations Vs. M/s. Davy Ashmore India Ltd. & anr., (1995)4 SCC 153 after considering the case of A.B.C. Laminart Pvt. Ltd. (supra) and the effect of Sections 23 and 28 of the Contract Act, it was held thus:-

26. This Court in the case of Rhodia Ltd. & ors. Vs. Neon Laboratories Ltd., AIR 2002 Bombay 502 after considering all the aforesaid cases, considered the clause of jurisdiction of the English Courts which in that context runs thus:-

"15.2 : All differences on the interpretation or performance of this agreement which will not be settled by amicable means, will be settled by the English Courts."

It was observed that the parties had agreed by choice to be governed by English Law and had agreed that Courts in England alone had jurisdiction. The Court further observed thus:-

"The Apex Court has observed that the parties to a contract in international trade or commerce may agree in advance on the forum which is to have jurisdiction to determine disputes which may arise between them. The chosen Court may be a Court in the country of one or both the parties, or it may be a neutral forum."

27. It may be mentioned that the Defendants had sued the Plaintiff in the Court in Turin. That Court held that it had the territorial jurisdiction. The claim of the Defendants is stated to have been rejected. The parties in this suit have, therefore, agreed to recognise competence of the Courts in Turin and consequently, to submit themselves to the jurisdiction of this Court. Hence, Issue No.(1) is answered in the affirmative.

28. Issue Nos.(2) & (4 ) : Termination of the Agreement dated 29 th October, 1990 and supersession of the Agreement dated 6 th October 1978 by the Agreement dated 29th October, 1990 : The documents relating to the contracts entered into by and between the parties and their correspondence pursuant to the contracts are admitted. These documents have been marked Exhibits as admitted documents.

29. The initial contract between the parties is dated 6th October 1978, Exhibit-B in evidence. This contract granted exclusive agency to the Plaintiff for sale of the Defendants" products within India upon the percentage of commission mentioned in Clause-8 of the Agreement. The Agreement was to remain in force until 31st December, 1979. Under Clause 4 of the said Agreement, it would be automatically renewed annually unless cancelled by either party by means of a registered letter to be given at least three months before the expiration of the agreement. The only requirement was to give three months' notice. The parties were not bound and liable only to terminate the agreement for any particular reason or cause.

30. The Agreement came to be renewed from year to year until 1990. In fact, an amendment to that agreement was made on 9th January, 1985 with regard to the extent of the commission. The parties are ad idem and not in dispute about the amendment. The parties appear to have had no disputes until 1990.

31. On 27th September 1990, the Defendants gave a formal notice of cancellation of the Agreement dated 6th October, 1978 as from 27th September, 1990. The Defendants specified that their Agreement would come to an end on 31st December, 1990. This cancellation letter marked Exhibit N-1 in evidence, was in terms of the aforesaid Clause-4 of the agreement which the parties were entitled to cancel by means of a registered letter given three months before expiration of the agreement. That letter has not been challenged.

32. The letter of cancellation was sent under cover of another letter of the Defendants also dated 27th September, 1990 marked Exhibit O-1 in evidence. It enclosed the letter ending the agency contract dated 6th October, 1978. It stated that it was not possible for the Defendants to renew the contract but suggested that the Defendants would enter into a new contract with the Plaintiffs.

33. The fresh contract was entered into by and between the parties on 29th October, 1990. The Defendants have signed that contract in the form of a letter on their letterhead addressed to the Plaintiff. The Plaintiff has signed the duplicate copy of the said agreement on its own letterhead also on 29th October 1990.

34. The two Agreements dated 6th October, 1978 and 29th October, 1990 are largely similar. They grant exclusive agency to the Plaintiff for sale of the Defendants equipments in India. The various sub-titles in the agreement are largely the same.

Clauses 4 of both the agreements show that the agreements were to be automatically renewed annually unless cancelled by other party. These clauses conferred the right of cancellation upon either party by means of a registered letter 3 months before the expiration of the agreement or 90 days before the end of each calendar year, respectively.

The extent of the percentage of the commission to be paid to the Plaintiff is also essentially the same. But this Court is not concerned with this since that is not disputed between the parties.

Under Clause 9 of each of the agreements the Plaintiff was to supply the technical assistance to the Indian customers for installation of the Defendants equipments and their subsequent maintenance. The Plaintiff was to send sufficient number of technicians for necessary training to the Defendant's factory in Italy. Lack of satisfactory technical assistance service would be a reason for cancellation of the agreement between the parties.

Clauses 10 of both the agreements provide the guarantee and warranty respectively. The Plaintiff was required to provide for defects of small entity and technical assistance for routine service during the said period.

Under Clauses 11 both these agreements, the Plaintiff was to appoint a Sales Engineer to serve as a Liaison Officer between the parties and to organise the entire promotional activity of the Defendants in India.

As aforesaid for all the disputes and controversies between the parties they agreed to recognise the exclusive competence of Turin High Courts under both the contracts.

35. After the cancellation of the Agreement dated 6th October, 1978 by the Defendant's cancellation Notice dated 27th September, 1990, which would bring to an end the contract dated 6th October, 1978 from 31st December, 1990, the parties, therefore, admittedly entered into a novatio under their Agreement dated 29th October, 1990. The Agreement dated 29th October, 1990, however, specifically provided in Clause-4 thereof that it cancelled and substituted completely the previous Agreement dated 6th October 1978 as well as its subsequent modifications.

36. The Defendants terminated the Agency Agreement dated 29th October, 1990 under their letter dated 22nd May, 1992 marked Exhibit S-1 in evidence. The Defendants mentioned in their Notice dated 22nd May, 1992 that the contract subsisted until 31st December, 1990 since the parties had dealings (with which this Court is not concerned except one machine called CMM SWIFT). These were also mentioned in the said notice.

37. The Plaintiff contends that the contract is not validly terminated. The Plaintiff, however, has not sued for any such declaration. The Plaintiff has only sued for payment of various amounts under the contract and accounts.

38. Under Clauses 4 of the contracts dated 6th October, 1978 and 29th October 1990, the parties were free to cancel their contract without assigning any reasons. All that the parties were required to do was to issue a cancellation notice by a registered letter to be given 3 months before the expiration of the agreement or within 90 days before the end of each calendar year. The Defendants have complied with Clause-4 of the Contract dated 29th October, 1990 which substituted the Contract dated 6th October, 1978.

39. The Plaintiff has not contended that it did not receive the cancellation notice. Hence, the issue with regard to the validity of the termination does not even come up for judicial adjudication. Nevertheless in the correspondence that ensued between the parties upon the notice issued by the Plaintiff's Advocate after the termination of the contract, the Defendant's have stated that the Plaintiff was no longer able to meet its contractual obligations and had lost its capacity to adequately promote the Defendants products and provide technical assistance and service in the Indian market which was the reason for the termination of the contract as stated in their letter dated 21st January, 1992, Exhibit A-2 in evidence. As aforesaid these were the obligations of the Plaintiff under Clauses 9, 10 and 11 of the contract between the parties. The Defendants have also stated in their correspondence that the Plaintiff lost the sales personnel to cover the market and the technical personnel to give effective service to the existing customers as well as the engineers required to be appointed by the Plaintiff. The Defendants have made a grievance that due to the lack of service of the Plaintiff, they have lost a very significant order for a large machine because of the Plaintiffs lack of contacts and presence at the customers site. The Defendants have also claimed that the amount of the orders obtained by the Plaintiff during the existence of the agency was extremely low and very unsatisfactory in their letter dated 23rd June 1993, Exhibit Y-1 in evidence.

40. It is seen that the Plaintiff has not sued the Defendants for declaration that the termination of the contracts between the parties is invalid or illegal. The Plaintiff has only sued for money claim in respect of its commission and damages suffered and for accounts. It is also seen that the parties were free to cancel their agreement by giving notice as specified in the agreement. The last agreement between the parties dated 27th October 1990, which substituted the earlier Agreement dated 6th October 1978, remained in force for more than a year until the notice of termination was given more than 90 days before the end of the calendar year 1992. Consequently, under the termination Notice dated 22nd May, 1992 an agreement would come to an end on 31st December, 1992. The contract is seen to be validly terminated.

41. The Plaintiff has alleged for the first time in its Advocate's Notice dated 23rd November 1992, Exhibit Z-1 in evidence, and thereafter in the Plaint that the purported cancellation of the Agreement dated 27th September, 1990 by the Defendants by giving at least three months notice was a pre-planned cancellation of the original Agreement dated 6th October, 1978 by substituting the same by the second Agreement dated 29th October, 1990 without any bona fide intention to perform the second agreement and to supply to the Plaintiff CMM SWIFT machine at a supposed concessional price which was an eyewash and done with mala fide intention.

42. The Plaintiff has not led any evidence to show or to suggest any such pre-planning by the Defendants. The contract between the parties is, therefore, shown to be cancelled as agreed between the parties. The agreement is contained in Clause-4 of the contract. The Defendants have complied with Clause-4 of the Contract dated 29th October, 1990. The Defendants have, therefore, proved that the agreement was validly terminated.

43. It is an admitted case of the parties that the Agreement dated 6th October, 1978 was superseded by the Agreement dated 29th October, 1990. In fact, the Agreement dated 29th October, 1990 expressly mentioned that fact. The submissions of the Plaintiff in the Plaint also show that fact. That fact is not seriously disputed. Consequently, issue Nos.(2) and (4) are both answered in the affirmative.

44. Issue No.(3) : Proof of the Plaintiff's dues under the Agreement dated 6th October, 1978 : It is the Plaintiffs case that it was not paid commission as agreed under the initial Agreement dated 6th October, 1978. The Plaintiff has not specified any period of the contract, during the subsistence of the contract, when any part of the agency commission was not paid. In any event, if that was so, the Plaintiff was required to terminate the contract which it had the right, entitlement and liberty to do under Clause-4 of the Agreement dated 6th October, 1978. The Plaintiff has not terminated that contract. In fact, the Defendants have terminated that contract after about 12 years of the contract having subsisted between the parties under their letter dated 27th September, 1990.

45. It is the Plaintiff's case in paragraph 10 of the Plaint that the Defendants agreed to compensate the Plaintiff for the unpaid commission. Such compensation was payable, as per the mutual decision between the parties, by the Defendants supplying CMM SWIFT machine to the Plaintiff at concessional price so as to compensate the Plaintiff. It is further the Plaintiffs case that the Agreement dated 6th October, 1978 was to be cancelled and substituted by a fresh agreement which was the Agreement dated 29th October, 1990 entered into by the parties.

46. The averments in the Plaint show that the SWIFT machine supplied by the Defendants was stated to be worth DM 68,500/- but was supplied at the concessional price of DM 25,000/-, CIF Bombay. The difference between the two prices being DM 43,500/- was the accounting between the parties to compensate the Plaintiff.

47. The Defendants invoice dated 30th November, 1990 for one machine Model SWIFT which is described as Multiaxes coordinate Universal Measuring machine complete with control TUTOR M, display monitor, Data storage, integrated Metrological software. TOTAL C.I.F. Bombay is for DM 25,000/-. The Plaintiff has accepted the machine. The Plaintiff claims to have paid custom duty and other charges thereon.

48. The evidence of the Plaintiff with regard to the acceptance of the CMM SWIFT machine at DM 25,000/- in reply to question No.4 in the cross-examination of the Plaintiff's witness is that the purchase was made compulsory by the Defendants. The answer of the Plaintiffs witnesses to question No.24 further shows that the Plaintiff accepted that machine as the only solution to recover some portion of the commission to the extent of DM 43,500/-. The Plaintiff had never stated this constraint in the correspondence between the parties and even in the Advocates Notice dated 23rd November, 1992 which fact was accepted by the Plaintiffs witness in answer to question No.89 in his cross-examination to explain how the Plaintiffs witness deposed that the acceptance was under compulsion. Similarly the Plaintiffs witness has deposed in answer No.90 how the negotiations took place with regard to the commission dues payable to the Plaintiff which were refused by the Defendants leaving the Plaintiff with no other option except by accepting the SWIFT/TUTOR package at the so-called concessional price which had to be compulsorily accepted by the Plaintiff.

49. Once the Plaintiff has accepted the machine the contract between the parties for compensating the Plaintiff for the unpaid commission, if any, must be taken to have been satisfied. It is only for the parties to make up accounts and to come to any reasonable figure of the payment of unpaid compensation upon negotiations. Such amount can be paid either in cash or by way of a future contract. In this case, the Plaintiff accepts that for compensating the Plaintiff upon certain negotiations that took place between the parties, the Defendants were to supply a machine at a concessional price. The Plaintiff accepted delivery of the machine whatever be the constraint. The Plaintiff must, therefore, be taken to be fully compensated upon such delivery.

50. The Plaintiff accepted the machine since 30th November, 1990 under the Defendant's invoice of that date. The Plaintiff has not claimed any further amounts by way of previous commission in the year 1990-1991 also when the Plaintiff accepted and acted upon the Agreement dated 29th October 1990.

51. In fact by the telex of the Plaintiffs Chairman such sent on 22nd June, 1990, Exhibit-L in evidence, the Plaintiff had expected the quotation, description and proforma invoice for DM 25,000/- CIF, Bombay for SWIFT machine. The Plaintiff complained that it was not received. The Defendants, in their reply telex, Exhibit-M in evidence, offered the SWIFT package, subject to and co-related with the new agreement between the parties that the Defendants were preparing. The parties corresponded with regard to the freight, date of delivery and detailed specifications to be mentioned in the delivery for the contract of SWIFT machine DM 25,000 CIF Bombay. The Defendants in the telex dated 14th September 1990, Exhibit-S in evidence, specified thus:-

"In any case, the delivery of this machine is subjected to the overall agreement we are proposing to Mytimasters. (Plaintiff)."

The further telex of the Plaintiff dated 19th September, 1990 inter alia mentions:

"We have placed an order and we want the machine."

The SWIFT machine has been supplied under invoice dated 30th November 1990, Exhibit-W in evidence. The Plaintiff got the machine cleared from the customs on 1st April 1991.

52. However, it may be stated that the settlement of the claim of compensation by negotiations between the parties would be if the CMM SWIFT machine supplied at concessional price was in good order and condition. The Plaintiff has alleged that the machine supplied was wholly defective. The Plaintiff has relied upon its telex dated 4th November, 1990 showing that its officer, one Mr. Misquitta had reported same damage to Yaxis air pads and guards and its telex dated 5th April, 1990 showing details of defects and a further telex dated 5th May, 1992, Exhibit-L in evidence, showing Mr. Misquitta to have reported further damage during installation of the machine. The officer Mr. Misquitta is not examined. The Plaintiff's oral evidence describing how the damage was caused due to faulty and inadequate packaging by the jolts and shocks during transit is not corroborated. The evidence of the Plaintiff shows that it was of zero value and could be taken to be in a junk condition and could be stated to be a mere toy machine to be used only for demonstration of the Defendants products.

53. On 20th May, 1991 when the Plaintiff informed the surveyors M/s. F. D. Hard Castle & Co. Pvt. Ltd. under its letter dated 20th May, 1991, Exhibit D-1 in evidence to conduct the survey of the defects in the machine. The Plaintiff is stated to have received the report of the surveyors showing the defects in August, 1991. The Plaintiff has claimed damages in respect of the defective machine inter alia in this suit. It is for the Plaintiff to prove the defects as well as damages suffered. The Plaintiff has not examined the surveyor. Hence, the report of the surveyors, otherwise marked Exhibit E-1 in evidence, is not proved and cannot be relied upon by the Plaintiff.

54. The Defendants contend that the contract was CIF Bombay. Hence, the Plaintiff was responsible for the damage suffered during transit. The Defendants claim that the damage, if any, to CMM SWIFT machine supplied by the Defendants to the Plaintiff at a concessional rate was incurred during transit. The Plaintiff has admitted that damage could have been caused during transit in reference to Question 95 in the cross-examination. However, the Plaintiffs Chairman has deposed that was due to lack of adequate packaging. This the Plaintiff has been unable to prove.

55. The Plaintiff, therefore, cannot claim any amount on account of the damage to the machine. No part of the Commission payable under the initial contract dated 6th October, 1978 is shown to be unpaid. Consequently, the Plaintiff is not entitled to claim any reliefs in respect of the commission under the Agreement dated 6th October, 1978. Hence, issue No.(3) is answered in the negative.

56. Issue No.(5) : Claim under the particulars of claim, Exhibit-K to the Plaint : These particulars of claim have been added in the Plaint by way of amendment made in March, 2010. The Plaintiff claims damages for breach of contract of exclusive agency (presumably under the Agreement of agency dated 29th October, 1990), the loss of commission and contracts by the Defendants having engaged another agent in India M/s. Gremach India Ltd., further commission for the sales of equipments as well as spare parts made by the Defendants through M/s. Gremach India Ltd. upto 31st December, 1992 without rendering accounts and commission effected by parties other than M/s. Gremach India Ltd. upto December, 1992 as also for sales on part protected cases upto 31st March, 1993. The Plaintiff has made the tall claim of '1,74,31,490.40/- under the aforesaid heads contained in the particulars of claim, Exhibit-K to the Plaint.

57. Needless to say that it is for the Plaintiff to prove each of the heads of such damages and commission claimed by the Plaintiff.

58. The Plaintiff claims to have suffered losses and damages upon the breach of the contract by the Defendants. No breach of contract on the part of the Defendants is shown or proved. The Plaintiff was appointed exclusive agent for sales of the Defendants equipments in India. It is for the Plaintiff to effect sales. The parties were at liberty to terminate the contract. The Defendants terminated the contract. The Plaintiff has not shown any specified sales effected by it so as even to make out a case that upon such sales the contract could not be terminated. That is not even the contract between the parties. Hence, the entire loss and damage claimed to have been suffered by the Plaintiff in Clause-1 of the particulars of claim, Exhibit-K to the Plaint, is without substance.

59. The loss of commission claimed by the Plaintiff is also required to be proved by the Plaintiff. This loss of commission would be for the commission payable to the Plaintiff. The Plaintiff would have to be paid the commission under and to the extent mentioned in Clause-8 of the agreement between the parties. This commission is on the sales effected. The Plaintiff must, therefore, show the sales effected by it. The Plaintiff must then show that the commission of the specific percentage agreed between the parties was claimed from the Defendants and refused to be paid by the Defendants. No such evidence whatsoever is produced. Hence, the claim for loss of commission under either of the agreements between the parties is not substantiated.

60. The Plaintiff has claimed the commission lost to the Plaintiff from various contracts of various third parties which could not be effectuated due to the abrupt termination of the contract of cancellation by the Defendants on 22nd May, 1992. The Plaintiff has tendered certain offers or orders of certain third parties being Hindustan Aeronautics Limited, Kunal Fabricators Private Limited, Nalavade Precision Tools Pvt. Ltd., etc. These orders could be proved only by the evidence of the signatories of the orders. The Plaintiff has not led evidence of any third party. Orders of any third parties cannot be proved, though they have been made Exhibit U-1-B, V-1 and W-1 in evidence, respectively.

61. It may be mentioned that the proof of the truth of those orders upon the Plaintiff could have been shown to Court only by the authors of those documents being examined. (See : (1) Madholal Sindhu Vs. Asian Assurance Co. Ltd., AIR 1954 Bombay 305, (2) Krishna Dayal Vs. Emperor, AIR 1946 Allahabad 227, (3) Sir Mohammed Yusuf Vs. D., AIR 1968 Bombay 112, (4) Ramji Dayawala & Sons (P.) Ltd. Vs. Invest Import, AIR 1981 SC 2085 and (5) Om Prakash Berlia & anr. Vs. Unit Trust of India, AIR 1983 Bombay 1).

62. Consequently, the Plaintiff has not proved commission lost to the Plaintiff by termination of the contract by the Defendants which could be claimed by the Plaintiff.

63. Similarly the amount of commission claimed for the machines and spares sold by the Plaintiff is to be proved by the Plaintiff by showing the sales. The Plaintiff has not proved any particular sales to any party of the equipments of the Defendants. The only documentary evidence on record is contained in certain letters/notes of the Defendants addressed to the Plaintiff marked Exhibit T-1-A to T-1-G in evidence. These are the letters showing the calculation of commission due to the Plaintiff in the year 1992-93. Upon receipt of the commission, the Plaintiff has not raised any dispute. The Plaintiff has not made any claim thereon. The Plaintiff has not issued any letter or notice showing that the commission paid is lesser than the commission due to the Plaintiff. The claim in respect of the commission is also, therefore, not substantiated at all.

64. The Plaintiff has further claimed commission for part protected cases upto 31st March, 1993. The Plaintiff has neither averred about the extent of commission specifically of the part protected cases or led any evidence with regard to the extent of the commission. That claim is wholly unsubstantiated.

65. The Plaintiff has further prayed for accounts from the Defendants of the sales and supplies made by the Defendants in India through M/s. Gremach India. Since it is seen that the contract has been validly terminated, the Defendants could have appointed any agents in India for sale of their products. The Defendants are not bound and liable to account for the same to the Plaintiff who were its earlier agents and whose contract has been validly terminated as per the entitlement of the Defendants as per Clause-4 of their Agreement with the Plaintiff dated 29th October 1990. The Plaintiffs tall claim of '1,74,31,490.40 is completely without any substance, wholly unsubstantiated and must be wholly rejected. Hence, issue No.(5) is answered in the negative.

66. Issue No.(6) : Repayment of interest : There is no agreement between the parties for payment of interest for the claim of commission. The Plaintiff has claimed the interest at 24% per annum. That is not an agreed rate of interest. It is claimed by the Plaintiff upon a case that the Defendants have wrongfully terminated the Plaintiff's contract and failed to pay the commission due to the Plaintiff. Since the Plaintiff has proved neither of these aspects and has been seen to be wholly disentitled to its claim of commission, the question of payment of interest does not arise and must be rejected. Hence, issue No.(6) is answered in the negative.

67. Issue No.(7) : This Court does not have the territorial jurisdiction to adjudicate upon the Plaintiff's claim. Nevertheless since the Plaintiff has agitated its disputes in the suit and led evidence, it is decided on merits. The Plaintiffs claim is completely lacking in merits.

68. Hence the following order:

ORDER

The Plaintiff's suit is dismissed with costs.

Suit dismissed.