Rohit Dhawan v. G.K. Malhotra

O.P Dwivedi, J.:— On 2nd October, 1999 parties entered into an agreement under which the defendant company was to manufacture two herbal medicines for diabetes management under two brands namely “Glunorm” and “dbNorm” which work as co-adjutants for diabetic therapy and the plaintiff was to have the exclusive selling and marketing rights in respect of two brands all over the world. Relevant portion of terms and conditions contained in agreement II dated 2nd October, 1999 are as under:

This agreement is in addition to Agreement -I.

This agreement is being signed between Platinum Remedies Pvt. Ltd. (PRPL involved in the manufacturing of herbal medicines/products) represented by Mr. G.K Malhotra s/o Mr. K.L Malhotra r/o A-5B, 365, SFS Shanti Kunj, Paschim Vihar, New Delhi -110 061.

Sree Bankey Bihari Impex P. Ltd. (SBBI involved in the trading and distributors of various products) represented by Mrs. Veena Dhawan r/o 169, Sainik Farms, New Delhi -100062, with the following terms and conditions:

1. To create infrastructure for the manufacturing of GLUNORM and DbNORM, SBBI will be contributing maximum 50% of the project cost that comes to approx. 6 lacs (As total project cost is Rs. 12 lac with the capacity of 1.5 to 2 lac capsules per month as mentioned by PRPL). In case the project cost comes down, the investment by SBBI will be proportionately as above. The amount of Rs. 1,51,000/- already deposited in PRPL, by Smt. Veena Dhawan, one of the Directors in SBBI, will be adjusted by SBBI against the payment of first supply from PRPL.

2. PRPL will be delivering the first consignment of 1 lac capsules plus free sampling, within a span of two months after receiving the infrastructure investment from SBBI. In case PRPL fails to deliver the required first consignment of 1 lac capsules within the stipulated time frame i.e 2 months, a penal interest at the rate of 5% per month will be paid to SBBI by PRPL, on SBBI investment, upto date of delivery of first consignment along with the samples. This is subject to maximum 3 months and thereafter there will be definite supply of capsules.

3. Once SBBI achieves the target of about 2 lac capsules per month, PRPL will increase the production capacity with its (PRPL) own investment within three months (as agreed by Shri G.K Malhotra) according to the demand placed by SBBI.

In any case PRPL is bound to part with SBBI, 25% of its increased capacity of total GLUNORM and dbNORm capsules, in addition to 2 lac capsules. In case PRPL is having a capacity of say, 5 million capsules per moth, 1.25 million capsules per month will be for SBBI in addition to already committed 2 lac capsules per month. The same pattern will be followed in case the production capacity is increased in future. To be more precise, PRPL will not let down SBBI in national and international market so for the supply of increased order for capsules from SBBI is concerned except for natural constraints or factors not in absolute control of PRPL.

4. Infrastructure investment by SBBI will remain in PRPL forever.

5. PRPL will invoice @ inclusive of Sales tax and packaging, 51% less of the MRP rate. Being MRP Rs. 12/- per capsules, PRPL will invoice at Rs. 5.60 plus sales tax (5%) -/28 paisa, totalling Rs. 5.88 This standard of 51%' less of the MRP rate will remain forever inspite of increase/decrease in the MRP rate in future.

6. Even in case of export outside India, PRPL will invoice at Rs. 5/88 per capsule against form ‘H’.

7. The payment terms will be 60 days credit basis initially for 3/4 months and then it will be on 45 days upto supply of 2 lac capsules. The credit period will not go beyond 60 days and will be maximum for 2 lac capsules.

8. There would be 10% sampling by PRPL, of the supply to SBBI. This sampling shall be increased if PRPL deems it fit.

9. These two brands i.e GLUNORM and dbNORM will be treated as co-sharer brands between SBBI and PRPL since efforts will be made to make it world renowned by both SBBI and PRPL jointly.

10. PRPL will deliver at least 5000 (4500+500 free) capsules immediately within 21 days after the signing of the agreement for the purpose of market survey and the payment shall be made/adjusted for 4500 capsules in the already deposited amount of Rs. 1,51,000/-.

11. Initially the MRP will be Rs. 12/- per capsule and in future any change in the MRP will be mutually decided between PRPL and SBBI.

12. If in any case or situation both the parties are unable to continue this agreement and PRPL continues with the present/future brand/brands of same category. PRPL shall have to pay 5% royalty on its net sales to SBBI perpetually. For this condition to be implemented, this agreement must last for minimum ten years.

13. This agreement will be a perpetual unless annulled by law agreement

2. It is alleged by the plaintiff that defendants did not adhere to the terms and conditions of the agreement. There were consistent defaults on the part of defendants. The defendants were required to supply 5000 capsules, 4500 on Invoice alongwith 500 free capsules as samples for market survey within 21 days of signing of the agreement but defendants never sent the said consignments. Further, the defendant had agreed to deliver to plaintiff the subsequent consignment of one lakh capsules alongwith 10% free samples under the agreement within two months. But the said consignment reached the plaintiff on 14th March, 2000 i.e after a gap of five months from the date of signing of agreements by the parties. It is further alleged that as per the agreement between the parties, deliveries of medicines/stocks was to be made on the basis of mutual understanding of the parties and there was no agreement for a minimum upliftment of medicines/stocks by the plaintiff. It is alleged that defendants dispatched consignments to plaintiff under the guise of shortage of storage space with them and thereafter started compelling the plaintiff to pay for the same, though the same were dispatched to plaintiff on Form-F. It is also alleged that as per the agreement dispatches were supposed to be billed at the agreed price of Rs. 5.85 per capsule inclusive of sales tax but the defendants billed the same at a price of their own choice and that price varied from consignment to consignment. The defendants also failed to supply sales promotion material to the plaintiff like the product catalogues, visual aids etc. which were utmost necessary for promoting the sales of a medicinal product of such a serious disease. The defendants supplied product catalogues only after five months and visual aids after eight months, seriously hampering the sales promotional strategies of plaintiff. Plaintiff at one point of time negotiated for procuring orders for Glunorm from international trade market specifically from Canada for which requisite data, technical details etc. was required from the defendants but the defendants miserably failed to provide the same thereby resulting into loss of reputation of plaintiff in the international trade market.

3. It is further alleged by the plaintiff that initially defendants had told the plaintiff that infrastructura1.project cost for manufacturing the said medicines/brands was Rs. 12 lacs and plaintiffs contribution was to be Rs. 6 lacs as per agreement. Plaintiff had paid a sum of Rs. 2,51,000/- on that account but the defendants, instead of initiating the supplies to the plaintiff, deliberately diverted the said founds for other purposes thereby intentionally delaying the supplies by five months. Plaintiff had also paid Rs. 1,51,000/- to defendants before the signing of said agreements and said amount was to be adjusted by defendants against the payment due in respect of first supplies which were to be made by defendants. But when the plaintiff insisted the defendants to initiate supplies of medicines, defendants started pressing plaintiff to enhance the infrastructura1.project from Rs. 12 lacs to Rs. 36 lakhs. Plaintiff was pressuried to execute further supplementary agreement dated 14th January, 2000 whereunder plaintiff was to have exclusive selling and marketing rights world over for which plaintiffs contribution to infrastructura1.project cost was to the tune of Rs. 18 lacs. Plaintiff is alleged to have made the following payments:

Rs. 6,50,000/- 31.1.2000 Rs. 2,00,000/- February, 2000 Rs. 1,00,000/- March, 2000 Rs. 6,40,000/- April, 2000 Rs. 1,10,000/- 12th May, 2000

Besides, a sum of Rs. 1,51,000/- had already been deposited with the defendants. Thus plaintiff duly fulfilled even their renewed commitments yet the defendants failed to fulfil their obligations. Under the terms and conditions of agreement, the plaintiff was to have exclusive selling and marketing rights in respect of said capsules but in the month of December, 2000 plaintiff noticed that defendants had started selling/marketing dbNORM capsules in the open market and in open defiance to the agreements entered into between the parties, that too at a lower MRP. Plaintiff thereupon sent a legal notice dated 18th January, 2001 to the defendant but do not avail. Thereafter plaintiff has filed the present suit seeking decree of permanent injunction against the defendants restraining them from selling/marketing the said capsules in any manner whatsoever and a mandatory injunction directing the defendants to withdraw the stocks of the said capsules from the market and also directing the defendants to continue to supply the stocks to plaintiff uninterruptedly.

4. Alongwith the suit, plaintiff has filed an application being IA No. 4380/2001 under order 39 rules 1 & 2 cpc restraining the defendants, their agents, employees, associates, workers, assignees, family members, relatives or any other person working for and on behalf of the defendants from selling, marketing of the said capsules in any form. While issuing the notice on the said application, this Court vide order dated 3rd May, 2001 restrained the defendants from selling, marketing, promoting the formulations under the name Glunorm/dbNorm either in capsules form or in powder form or any other form. On service of the notice, defendants have filed an application bearing IA No. 5803/2001 under Order 39 Rule 4 CPC for vacating the ex parte ad interim injunction which was granted on 3rd May, 2001. This order shall govern the disposal of two IAs, being I. A. 4308/2001 under order 39 rules 1 & 2 cpc filed by plaintiff and I.A 5803/2001 under Order 39 Rule 4 CPC filed by defendants.

5. In their written statement, the defendants have pleaded that they are licenced manufacturers of certain Ayurvedi medicinal preparations. Shri G. K. Malhotra who is Managing Director of defendant no. 2 company is a Biochemist by qualification and has formulated the two drugs ‘Glunorm’ and ‘dbNorm’. In the year 1999 Shri Kamal Dhawan, the father of plaintiff no. 1, approached defendant no. 1 with the request to conduct research on “Morschella” which is a member of exotice fungi family. At that time Shri Kamal Dhawan did not disclose to defendants that he was the Managing Director of M/s. Yogi Pharmacy Limited which was involved in several caes of cheating and fraud. Mrs. Veena Dhawan wife of Shri Kamal Dhawan and mother of plaintiff no. 1 gave two cheques - one for Rs. 51,000/- and other for Rs. 1,00,000/- to defendant no. 2 for conducting the research on “Morschella”. Defendant no. 2 was having negotiations with M/s. Sunita Petroleum Ltd who wanted defendant no. 2 to develop new molecules for diabetes. On coming to know this, Mr. Kamal Dhawan approached to defendant no. 2 with the request to induct him in the Board of Directors of defendant no. 2. He had also offered to purchase 20% of equity of the defendant no. 2. Defendant no. 2 did not agree to the same. Shri Kamal Dhawan as a counter blast started showing complete lack of interest in the Morschella project and went to the extent of expressing his doubts about the whole project and also requested for a refund of the entire advance. The defendant immediately returned the machinery procured by them as also raised a bill for Rs. 1,15,400/- towards the work done on the said project but the said bill was not honoured by Shri Kamal Dhawan. In fact the diabetic molecule formulated by defendant was administered to Shri M.L Dhawan, father of Shri Kamal Dhawan, who is a patient of diabetes for the last fifty years. This had significantly improved the condition of Shri M.L Dhawan and he experienced a great sense of well being and comfort. Shri Kamal Dhawan, sensing that this diabetic molecule would have a great market allover the world, approached the defendants for entering into an agreement with the plaintiff. Shri Kamal Dhawan represented to defendants that plaintiff company had extensive pharma marketing and distribution experience both nationally and internationally. On persuation, the plaintiff company entered into an agreement with defendants in the year 1999 for exclusive marketing of, new formulations namely ‘Glunorm’ and ‘dbnorm’ manufactured by defendants. Defendants had already applied for registration of trade marks namely ‘Glunorm’ and ‘dbNorm’ and obtained valid licences for the purposes of manufacture and sale of these medicinal preparations. Plaintiff did not deposit the infrastructure amount of Rs. 6 lacs as promised in the first two agreements. They had deposited only Rs. 1 lac on 2.11.1999, since the plaintiffs were further interested in cornering the entire business in respect of said two preparations, they approached the defendants for revising the earlier agreement and vide agreement dated 14th January, 2000, non-refundable deposit to be made by the plaintiff was increased from Rs. 6 lacs to Rs. 18 lacs, out of which Rs. 10 lacs was agreed to be paid by 24th January, 2000 and Rs. 8 lacs to be paid by 15th February, 2000. It was further agreed that all the production both present and future of defendants would be billed to plaintiffs. But plaintiff again failed to deposit Rs. 10 lacs by 24th January, 2000. The plaintiffs only paid a sum of Rs. 6.5 lacs. Further deposit of Rs. 1 lacs each were made on 11th and 15th February, 2000. As on 15th February, 2000 total deposits made by plaintiff were to the tune of Rs. 9.5 lacs. It is further pleaded that before signing the agreement, defendant's research team had made team formuation of ‘Glunorm’ and ‘dbNorm’ capsules which were clinically evaluated by Dr. Firoz Siddique appointed by the parties and by Dr., Pankaj Aneja after the signing of agreement. In the course of such clinical trials, at least 9000 capsules of Glunorm and dbNorm were consumed and thus stipulations in the agreement regarding the supply of 4500 capsules on paid basis plus 500 capsules free “samples” were completely fulfilled. Then on 28th February, 2000 plaintiff placed an order of 1,80,000 capsules, out of which 90,000 capsules were to be against form ‘F’, though the plaintiff was not entitled to import against form ‘F’. This order was placed in violation of terms of the contract. This fact has been suppressed by plaintiff. The defendants made their first supply of 1,09,800 capsules on 14th March, 2000 and raised an invoice for the same for Rs. 6,75,270/- and an Invoice for Rs. 18,819/- for 3600 capsules. Immediately thereafter defendants supplied 63,720 Glunorm capsules and raised an invoice of Rs. 3,63,204/- against form ‘F’. These supplies were made by defendants in the interest of carrying on business despite the fact that deposit of Rs. 18 lacs had not been received by them. Plaintiff thereafter made the following payments:

Rs. 6,50,000/- 31.1.2000 Rs. 2,00,000/- February, 2000 Rs. 1,00,000/- March, 2000 Rs. 6,40,000/- April, 2000 Rs. 1,10,000/- 12th May, 2000

With these payments, the total deposit amount of plaintiffs comes to Rs. 15 lacs only. On 17th May. 2000 defendants sent an account statement showing the amount of Rs. 10,57,293/- was outstanding against the plaintiff for the material supplied by defendants after duly adjusting the amount of Rs. 1,14,400/- paid by Mrs. Veena Dhawan towards Morschella project.

On 12th June, 2000 defendants approached the plaintiff with the request to pay the amount which have fallen short in the deposit account. Plaintiff promised to do so and at the same time requested for supply of more capsules and a reduction of cost of each capsule. On 12th June, 2000 itself the defendants made a supply of 30,240 Glunorm capsules amounting to Rs. 1,70,856/- at a reduced rate. Plaintiff thereafter paid Rs. 2,50,000/- on 17th June, 2000 and Rs. 50,000/- each paid on 19th & 26th June, 2000.

6. Since plaintiffs were not adhering to any terms and conditions of agreement between the parties, the defendants sent E-mail dated 22nd July, 2000 raising issues regarding the slip shod manner in which plaintiffs were doing business and not making payments in time and also not lifting the minimum 2 lacs capsules per month which was the production capacity of defendants and in terms of agreement dated 14th January, 2002 plaintiffs were obliged to lift the same. It was also brought to the notice of the plaintiff that they were not selling the capsules Dbnorm and the entire stock of capsules dbNorm was lying stuck. In response thereto, the plaintiffs admitted that they unilaterally have taken the decision to defer the marketing of second capsule ‘dbNorm’ and they were some difficulty in making the payment. Then on 25th July, 2000 the defendants made a further supply of 60,490 capsules of Glunorm to plaintiffs and also raised an Invoice of Rs. 3,65,904/-. On 3rd August, 2000 plaintiffs gave two cheques, one for Rs. 1,50,000/- and another for Rs. 75,000/-, both of which were dishonoured by the plaintiffs bank on account of insufficiency of funds. Keeping in view the facts that large quantities of stocks of both capsules namely Glunorm and dbNorm were lying with defendants which the plaintiff was not lifting as also the fact that payments were not forthcoming from plaintiffs, defendants vide their letter dated 12th August, 2000 brought to the notice of plaintiffs that the abandonment of the second capsule dbNorm by the plaintiffs had caused serious loss to defendants as about 4 lacs capsules of dbNorm alongwith printed packing material were lying in their stocks. The fact regarding dishonoured cheques was also brought to the notice of plaintiffs who was asked to clear all overdue payments immediately but of no avail. On 14th August, 2000 defendants again wrote to plaintiffs informing that the deposit amount was deficient by Rs. 10.63 lacs and a further amount of Rs. 3.66 lacs had become due for the supplies made on 25th July, 2000. Plaintiffs were asked to lift the 4 lacs capsules ‘db norm’ which are lying with defendants which was worth Rs. 22.04 lacs. It was clearly stated in the said letter that if the plaintiff failed to honour their commitments regarding capsule dbNorm by 16th August, 2000, agreement entered into earlier with regard to dbnorm would stand terminated.

7. Plaintiff however did not comply with any of the requests made in the fax dated 14th August, 2000. Therefore the marketing contract in respect of dbnorm stood terminated with effect from 16th August, 2000. Plaintiff has suppressed this letter from the Court. In their reply dated 16th August, 2000 plaintiff raised some issue regarding clinical trial reports only with a view to avoid their obligations under the contract. Defendants thereupon commenced marketing of dbNorm capsules of its own, treating the agreement in respect of dbNorm capsule as cancelled.

8. Plaintiff placed an order for supply of 1,50,000 Glunorm capsules. Vide their letter dated 14th November, 2000, defendants informed the plaintiff that the said order was ready since September, 2000. Plaintiff was requested to lift the same and make the payment. In the said letter it was made clear that since the name of the plaintiffs was mentioned on the packaging as exclusive marketing agents, it was only for the plaintiff to sell the same. In response thereto, plaintiffs wrote a letter dated 16th November, 2000 again raising the issue regarding clinical trials. Defendants sent their reply dated 18th November, 2000 wherein they clarified that free samples and pathology tests have already been done at the expenses of defendants. In the said letter dated 18th November, 2000 defendants also pointed out their other outstanding demands and also made clear their intention to terminate the agreement with regard to Glunorm as well. Plaintiffs did not respond to defendants's letter dated 18th November, 2000 but about 2-1/2 months after, they sent statement of stock by fax dated 24th January, 2000 which indicated that more than 60% of the stock supplied by defendants, were lying unsold. This statement makes so absolutely clear that plaintiffs were never in a position to perform their obligation under the Contract. Plaintiff has also concealed this fact from the Court. Ultimately vide their letter dated 29th January, 2001 defendants made it clear to plaintiffs that if the payments were not settled before 1st February, 2001, the arrangements for exclusive marketing right in respect of “Glunorm' would stand terminated with effect from 1st February, 2001.

This letter also has been suppressed by plaintiffs. Plaintiffs did not sent any reply to the defendant's letter dated 29th January, 2001. Ultimately vide letter dated 6th February, 2001 defendants informed the plaintiff that marketing rights with respect to Glunorm have been terminated. It is thus contended by defendants that plaintiffs have failed to perform their part of obligations under the contract both in respect of making the payments for supplies which have been made and also in respect of achieving the desired marketing results and therefore conferring the exclusive marketing agreements rights on plaintiff in respect of dbnorm and Glunorm stood terminated with effect from 16th August, 2000 and 1st February, 2001 respectively but the plaintiffs have suppressed these facts from the Court so they are not entitled to any discretionary relief.

9. Having bestowed my thoughtful consideration to the respective submissions made by learned counsel for the parties in the light of material on record. I am clearly of the view that plaintiff is guilty of suppression of material facts which disentitles him from discretionary relief of injunction. Parties are blaming each other for breach of agreement as is clear from the pleadings. Question as to which party is to blame for breach can appropriately be decided only at the trial. At this stage when the Court has to decide only about grant/refusal of an ad interim injunction, any deliberate attempt on the part of either party to suppress the material facts would disentitle such party for getting such relief.

10. In his plaint, plaintiff has made no reference to the communications contained in defendant's letter dated 12th August, 2000, plaintiff's reply dated 13th August, 2000, defendant's FAX message dated 14th August, 2000, plaintiffs reply dated 16th August, 2000, defendant's letter dated 14th November, 2000, plaintiffs reply dated 16th November, 2000, defendant's letter dated 18th November, and 29th January, 2001 and 6th February, 2001. In particular fax message dated 14th August, 2001 sent by defendants whereby plaintiffs exclusive marketing rights in respect of dbNorm capsules were to stand terminated with effect from 16th August, 2000 and defendants' letter dated 29th January, 2001 whereby plaintiffs marketing rights in respect of Glunorm were to stand terminated w.e.f 1st February, 2001 have been suppressed. Plaintiffs sent their reply dated 16th August, 2000 to defendants fax message dated 14th August, 2001. This means that these communications had been received by plaintiffs whereby the marketing rights agreement in respect of dbNorm stood terminated with effect from 16th August, 2000 and the other agreement in respect of Glunorm also stood terminated with effect from 1st February, 2001. These communications are important and if these facts were brought to the notice of the Court at the time of first hearing of the suit, the ad interim ex parte injunction as prayed would not have been granted.

11. The suit as framed gives the impression that the agreement conferring exclusive marketing rights on the plaintiff in respect of Glunorm and dbNorm are still in force. The grievance in the plaint appears to be that while the two agreements are still in force, the defendants had started violating it by selling and marketing their products, inviolation of the agreements and that is why ex parte ad interim injunction was granted. Had the plaintiff brought to the notice of this Court that agreements have already been terminated, he would not have been entitled for ex parte injunction because in that case plaintiff could at the most claim that termination of agreements is contrary to law in which case only remedy available to the plaintiff would have been damages because agreements were not of such nature that their specific performance could be enforced. So in view of Section 41 of Specific Relief Act, no injunction could have been issued to prevent the breach of agreement which cannot be specifically enforced. In the case of M/s. Seemax Construction (P) Ltd. v. State Bank of India and Anr., AIR 1992 Del 197 it was held that the suppression of material fact by itself is a sufficient ground to decline the discretionary relief of injunction.

A party seeking discretionary relief has to approach the Court with clean hands and is required to disclose all material facts which may, one way or the other, affect the decision. A person deliberately concealing material facts from court is not entitled to any discretionary relief. The Court can refuse to hear such person on merits. In that case plaintiff suppressed the facts that plaintiff had filed earlier suit before subordinate courts in which the relief was not granted. Non-disclosure of this fact was held to be sufficient to disentitle the plaintiff from discretionary relief of injunction. In the case of M/s. Wander Limited and Anr. v. Antox India P. Ltd., 1990 (Supp) SCC 727 it was held that usually, the prayer for grant of an interlocutory injunction is at a stage the existence of the legal right asserted by plaintiff and its alleged violation are both contested and uncertain and remain uncertain till they are established at the trial on evidence. The Court, at this stage, acts on certain well settled principles of administration of the form of interlocutory remedy which is both temporary and discretionary. The object discretionary. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his rights for which he could not adequately be compensated in damages recoverably in the action if the uncertainty were resolved in his favour at the trial. The need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The Court must weight one need against another and determine where the “balance of convenience lies”. The interlocutory remedy is intended to preserve in status quo, the rights of parties which may appear on a prima facie case. The court also, in restraining a defendant from exercising what he considers his legal right but what the plaintiff would like to be prevented, puts into the scales, as a relevant consideration whether the defendant has yet to commence his enterprise or whether he has already been doing so in which latter case considerations somewhat different from those that apply to a case where the defendant is yet to commence his enterprise, are attracted.

12. Had the factum of termination of agreements been brought to the notice of Court at the first consideration of grant/refusal of ex parte injunction, the interlocutory relief may not have been granted. As already noticed, the plait gives the impression that agreements are still in force and plaintiff is continuing to sell the said capsules but simultaneously the defendants had also started marketing/selling its products in violation of agreements. In such circumstances withholding of relevant documents from the Court would amount to playing fraud upon the Court. In the case of S.P Chengalvaraya Naidu (Dead) by Lrs. v. Jagannath (dead) by LRs. and Ors., AIR 1994 SC 853 it was observed that the Courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. It can be said without hesitation that a person whose case is based on falsehood has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. A litigant, who approaches the Court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party. It was next contended by learned counsel for the plaintiff that under the terms of contract/agreement exclusive marketing rights were conferred on the plaintiff inperpetuity and therefore agreements could not be terminated. This arguments can not be entertained for the simple reason that plaintiff has not pleaded in the plaint that agreements have been terminated and such termination is contrary to law. On the contrary, the plaintiff has come to the Court on the basis that agreements are still in force but the defendants have started marketing and selling the said capsules. When the factual base is not laid in the plaint itself no legal arguments arising there from can be entertained. Besides, absolute and specific enforcement of such contracts will be unconscionable. Plaintiff may completely paralyse the business of defendants by not lifting the manufactured stocks and at the same time imposing a restraint on the defendants from selling their own products. In the case of Marti-Bakr Aircraft Co. Ltd. and Anr. v. Canadian Flight Equipment Ltd. reported in All England Law Reports 1955 Vol. II Page 732 it was held that although where the character of perpetuity attaches to the legal personality of contracting parties, a contract between them, indefinite in duration, may not be determinable by one party by giving notice of termination, yet that doctrine of permanence either has no application to mercantile or commercial contracts or, if it applies, is subject to a wide class of exceptions, especially where mutual trust and confidence is involved.

14. Looking to the nature of business of parties, the fact that defendants are manufacturers and plaintiff is only a selling agent, I think doctorine of perpetuity should not be applied to such agreements, because in that case one party may completely ruin other party's business by sheer inaction on their part.

15. Further in this case balance of convenience overwhelmingly lies in favour of the defendants who will be completely losing their business if plaintiff does not sell their products in the market and defendants are also not allowed to sell their products. Plaintiff on the other hand can be adequately compensated for the loss of business if their claim for exclusive selling rights is upheld. It is the defendants to stand suffer irreparable loss if they are restrained from selling their products particularly when the plaintiff has failed to create any significant market for the said products. During existence of agreement for about one year, the total sales made by the plaintiff in respect of said capsules was around 2 lacs capsules. More than 60% of the stocks supplied by defendants to plaintiff is still lying unsold with plaintiff as is clear from the stock statement sent by plaintiff on 24th January, 2001.

16. For these reasons, I am of the view that ex parte injunction granted on 3rd May, 2001 is liable to be vacated. Accordingly application being IA NO. 5803/2001 under Order 39 Rule 4 CPC is allowed and IA No. 4380/2001 under order 39 rules 1 & 2 cpc filed by the plaintiff is hereby rejected. Ex parte injunction granted on 3rd May, 2001 is hereby vacated. Plaintiff shall also pay payment of Rs. 10,000/- as cost.

IAs stand disposed of.