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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • S. N. Sapra
  • K. K. Mehra
Judges
  • CHARANJIT TALWAR, J.
Acts
  • provisions of S. 202 of the Contract Act
  • S. 202 of the Contract Act.
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • S. N. Sapra
  • K. K. Mehra
Judges
  • CHARANJIT TALWAR, J.
Acts
  • provisions of S. 202 of the Contract Act
  • S. 202 of the Contract Act.
See more information ...
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This is an application under Order 39, Rules 1 and 2 read with Order 40, Rule 1 of the Civil Procedure Code for grant of temporary injunction and for appointment of a receiver. The plaintiff sued for a declaration, permanent injunction and rendition of accounts against (1) Feroze Khan (director of the picture "Qurbani"), (2) M/s F.K. International (the producer, a sole proprietary concern of defendant No. 1), and (3) M/s Bobby Arts International (distributors in the Delhi-U.P. territory).

The plaintiff's case (as pleaded) is that by an oral agreement dated 7 August 1980 he was appointed agent for 11 years to exploit the picture in the Delhi-U.P. territory, authorised to book and supervise exhibitions, to maintain offices (including at his residence), and to receive 20% commission on net business monthly with accounts maintained by the defendants' accountants. He claims to have collected Rs. 45 lacs on behalf of defendants 1 and 2 but received only Rs. 1,00,000 as commission; he alleges defendants removed prints and publicity material in late October 1980 and intend to transfer distribution rights to defendant No. 3. A circular dated 13 January 1981 was issued (by the Motion Pictures Association at the instance of defendants 1 and 2) stating the plaintiff was not authorised to deal with the picture without prior approval.

Procedurally, on 23 January 1981 the court issued notices for the application and directed the parties to maintain status quo as of 10:52 A.M. Defendant No. 3 filed a reply supported by an affidavit of Feroze Khan. The defendants denied the plaintiff was a distributor and said he was only a manager of defendant No. 2 on a salary of Rs. 5,000 per month from July 1980. Defendants alleged payments totaling Rs. 3.23 lacs had been made to the plaintiff for publicity and office expenses and that Rs. 1,00,000 claimed by the plaintiff was paid for publicity/exhibitor dues. Defendants alleged the picture had incurred losses in the Delhi-U.P. territory (approx. Rs. 20 lacs) due to plaintiff's negligence and averred they had appointed defendant No. 3 as distributor on lease for Rs. 9,00,000 with effect from 13 January 1981.

Legal Issues Presented

  1. Whether, for the purposes of Section 202 of the Indian Contract Act, the plaintiff (alleged agent) had an "interest in the property" which is the subject-matter of the agency (prints/publicity material/distribution rights), such that the agreement could not be terminated to his prejudice.
  2. Whether, on the material before the court at the interlocutory stage, the plaintiff was prima facie entitled to interim reliefs sought: (a) temporary injunction restraining the defendants from exploiting, distributing or transferring the picture in the territory, and (b) appointment of a receiver to take possession of the prints of the picture.

Arguments of the Parties

Plaintiff's Arguments

  • The plaintiff's counsel (Mr. S.N. Sapra) accepted that the plaintiff's case must fall within Section 202 of the Contract Act — i.e., the plaintiff must show he had an interest in the property which formed the subject-matter of the agency so that the agreement could not be terminated to his prejudice.
  • The plaintiff's asserted "interest" in the subject-matter was the plaintiff's personal skill and experience by virtue of which he exploited the picture; counsel argued that this skill gave the plaintiff an interest in the prints and publicity material and thus entitles him to the interim reliefs sought after those materials were taken away.
  • The plaintiff did not claim any proprietary title in the prints or publicity material beyond the asserted interest derived from his skill and role in exploitation.

Defendants' Arguments

  • The defendants denied the plaintiff was appointed distributor — they said he was merely a manager of the second defendant paid Rs. 5,000 per month and not vested with distribution rights or proprietary interest in the prints.
  • They alleged substantial payments (Rs. 3.23 lacs) were made to the plaintiff for publicity and office expenses and that Rs. 1,00,000 claimed by the plaintiff was paid for publicity/exhibitor dues.
  • The defendants claimed the picture suffered losses in the territory (approx. Rs. 20 lacs) due to the plaintiff's negligence, and thus the plaintiff was not entitled to the reliefs claimed.
  • Defendants relied on precedent (Dalchand v. Hazarimal, AIR 1932 Nag. 34) to argue that an agent entitled only to remuneration/commission does not necessarily possess the sort of "interest in the property" contemplated by Section 202 of the Contract Act.
  • They also asserted that, prior to the issuance of the status quo order, distribution rights had been transferred to defendant No. 3 for Rs. 9,00,000, which defeats the plaintiff's claim for rendition of accounts and possession.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Dalchand v. Hazarimal, AIR 1932 Nag. 34 Interpreting Section 202 of the Contract Act: an agent who merely retains part of the price as remuneration (or is paid commission) does not thereby acquire an "interest in the goods" which prevents termination of the agency. The court relied on the decision to show that a person who is to receive commission after accrual of collections and who contributes skill does not prima facie possess the kind of proprietary interest in the subject-matter (prints/publicity material) required by S. 202 to preclude termination; Dalchand supported rejecting the plaintiff's claim to an interest based solely on skill/commission.

Court's Reasoning and Analysis

The court set out a focused interlocutory analysis rather than resolving the full merits. It proceeded in the following steps:

  1. Scope at the interlocutory stage: The court stated it was unnecessary at this stage to determine whether the alleged oral agreement of 7 August 1980 in the exact terms pleaded by the plaintiff actually existed; for present purposes the court assumed such an agreement existed and proceeded to examine whether the plaintiff, under that agreement, had any interest in the property which was the subject-matter of the agency.
  2. Legal test under Section 202: The court identified Section 202 of the Contract Act as the controlling provision — the plaintiff had to show he had an interest in the subject-matter (prints/publicity material/distribution rights) such that the agreement could not be terminated to his prejudice.
  3. Examination of plaintiff's asserted interest: The plaintiff's counsel contended that the plaintiff's personal skill and experience constituted an interest in the subject-matter and conferred protection. The court noted the plaintiff did not assert any other proprietary right in the prints or publicity material; the claimed interest rested solely on his skill and commission arrangement.
  4. Application of precedent: The court relied on Dalchand v. Hazarimal (AIR 1932 Nag. 34) which had analysed Section 202 and concluded that an agent entitled to retain part of the price as remuneration did not thereby have an interest in the goods. The court treated that authority as analogous and persuasive.
  5. Prima facie conclusion: Applying the reasoning of Dalchand and the facts as pleaded, the court concluded prima facie that the plaintiff did not have the requisite proprietary interest in the prints or publicity material. The arrangement that the plaintiff would be paid commission after accrual of collections did not, on the material before the court, amount to an interest under Section 202.
  6. Relief consequences: Because the plaintiff was not prima facie shown to have an interest in the subject-matter, he was not entitled at this interlocutory stage to an order restraining defendants 1 and 2 from exploiting, distributing, exhibiting or transferring the rights in the picture. Further, given the defendants' categorical averment that they had appointed defendant No. 3 as distributor for Rs. 9,00,000 prior to the suit, the court found the plaintiff's prayer for appointment of a receiver to take possession of the prints was also liable to be rejected.
  7. Disposition: On these bases the court dismissed the application for interim injunction and for appointment of a receiver.

Holding and Implications

Holding: The application for temporary injunction and for appointment of a receiver was DISMISSED.

Consequences and immediate effects:

  • The plaintiff was not shown, on the prima facie material before the court, to possess an interest in the subject-matter of the alleged agency within the meaning of Section 202 of the Contract Act sufficient to preclude termination or to ground the interim reliefs sought.
  • The plaintiff was not entitled to restrain defendants 1 and 2 from exploiting, distributing, exhibiting or transferring the picture in the territory, nor to the appointment of a receiver to take possession of the prints.
  • The application was dismissed with no order as to costs.
  • The earlier status quo order dated 23 January 1981 (directing status quo as of 10:52 A.M.) was vacated.

Broader implications: The opinion applies established principles (including the decision in Dalchand) on the scope of "interest" under Section 202 of the Contract Act in the interlocutory context; it does not purport to set new precedent beyond applying that authority. The decision's effect is limited to denying interim relief on the facts and materials before the court.

Application dismissed.
Show full summary ...

    Subhash Chandra Jain v. Feroze Khan And Others

    This is an application under O. 39, Rr. 1 and 2 under O. 40, R. 1. Civil P.C for grant of temporary injunction and for appointment of a receiver.

    2. The plaintiff has filed the present suit for declaration permanent injunction and for rendition of accounts against Feroze Khan, director of picture Qurbani, M/s. F.K International, its producer and M/s. Bobby Arts International its distributors in Delhi-U. territories.

    3. His case is that by an oral agreement, defendant No. 1 acting on behalf Of defendant No. 2 which is his sole proprietary concern, appointed the plaintiff as an agent for a period of 11 years from 7th Aug. 1980, to exploit the picture in the Delhi-U.P territory (herein called the territory’). According to him under the terms of that oral agreement, because of recognition of his skill and experience he was to carry out the business of distribution of the picture in the territory. The plaintiff was authorised to book the picture and supervise its exhibition in various theatres in the territory. He was required to open an office on behalf of defendants 1 and 2 at his residence, H-68, South Extension. New Delhi. He could also set up an office in the Film Colony, Chandni Chowk, Delhi. The plaintiff avers that he was to be paid a commission at the rate of 20 per cent on the net business of the said picture, the business being distribution, exhibition and exploitation throughout the territory. It was further agreed that the amount of commission was to be paid to the plaintiff every month after accrual of the net collection and that the accounts were to be maintained by the accountants of defendants 1 and 2. All the terms of the oral agreement have been mentioned in para 6 of the plaint.

    4. In pursuance of the terms and conditions of the agreement, the plaintiff avers, he started the work of distribution and exploitation of the said picture by entering into agreements with various exhibitors of the territory. It is claimed that by his experience and skill the plaintiff secured business of and was able to collect Rs. 45 Lacs on behalf of defendants 1 and 2 but he has been paid only Rs. 1,00.000/- towards his commission. His grievance is that towards the end of October, 1980, defendant No. 1 by playing a rule on him took away from him the prints and the publicity material of the picture. The plaintiff apprehends that as the picture has proved a great success at the box-office, defendants 1 and 2 illegally want to transfer the distribution rights of the said picture in favour of defendant No. 3. According to him, his apprehension stands confirmed by a circular issued by the Motion Pictures Association on 13th Jan. 1981, which circular has been issued at the instance of defendants 1 and 2, informing the members of that Association that the plaintiff was not authorised in any capacity whatsoever to deal with the picture without prior approval of the said defendants.

    5. Hence, the instant suit for declaration, permanent injunction and rendition of accounts.

    6. While issuing notices of this application on 23rd Jan. 1981, I had directed the parties to maintain status quo as of 10-52 A.M of that day.

    7. Defendant No. 3 has lied reply to this application which is supported by an affidavit of Feroze Khan, defendant No. 1 and sole proprietor of defendant No. 2.

    8. In the reply, the claim of the plaintiff has been totally denied. It is denied that the plaintiff was, at any time, appointed as a distributor of the picture for the territory. The case of the defendants is that the plaintiff was appointed manager of the second defendant at a salary of Rs. 5,000/- per month commencing from July, 1980. It is denied that any business was conducted by the plaintiff on behalf of the defendants from his residence. The allegations made against the plaintiff are that in spite of instructions to him not to screen the picture in some parts of the territory because of communal riots, he (the plaintiff) confirmed the release dates of the picture thereby causing huge losses to the distributor. To meet the expenses of the publicity of the picture and in running and maintenance of second defendant's office in Bhagirath Place, Chandni Chowk, Delhi, it is averred that an amount totalling Rs. 3.23,000 had been paid to the plaintiff in cash and by cheques. Apart from that, An amount of Rs. 1,00,000/- which is being claimed by the plaintiff as his commission, was paid to him by the defendant for the cost of publicity and for payment of dues to an exhibitor. Case of the defendants is that although the said picture has proved to be a success in other territories, it has gone into losses In Delhi-U.P territory due to the sheer negligence of the plaintiff. The loss suffered by the defendant is stated to be to the tune of rupees twenty lacs.

    9. Further, the case of the defendants is that because of the losses which have occurred due to the negligence or want of diligence and skill on the part of the plaintiff, the defendants had to request the Motion Pictures Association to issue circular calling for the dues of the exhibitors payable by defendants 1 and 2. It is further averred that the statement of 28th Dec. 1980, purporting to mention the outstandings of the exhibitors in this territory was prepared by the plaintiff and handed over to defendant No. 1. At the foot of that statement, the plaintiff has declared that he has not received any moneys other than shown in the statement from the exhibitors, it is further averred that with effect from 13th Jan. 1981, defendants 1 and 2 have appointed defendant No. 3 as their distributor on lease-basis in respect of the picture in the territory in consideration of a sum of Rs. 9,00,000/-.

    10. The case thus put up by the defendants is that the plaintiff was merely an employee and in that capacity he is not entitled to the reliefs of declaration and permanent injunction. In any case, it is urged, prior to the issuance of the status quo order the distribution rights had been transferred to defendant No. 3 for consideration of rupees nine lacs and as such the plaintiff is not entitled to any rendition of accounts.

    11. To succeed in this application, Mr. S.N Sapra, learned counsel for the plaintiff, admits that he has to bring his case within the purview of S. 202 of the Contract Act. The plaintiff has to show that is an agent he had himself an interest in the property which forms the subject matter of the agency. If he has an interest in the property then the agreement cannot be terminated, to his prejudice.

    12. For the disposal of this application it is not necessary for me to hold at this stage whether any oral agreement was or was not entered into between the parties on 7th Aug. 1980. I will assume that such an agreement, as referred to by the plaintiff, containing the terms which have been stated in para 6 of the plaint, was arrived at between the plaintiff and defendants Nos. 1 and 2. What, however, is to be seen is whether under that oral agreement the plaintiff had any interest in the property which is the subject-matter of the agency.

    13. According to Mr. Sapra, interest of the plaintiff in the subject-matter of the agency was his skill by which the picture was exploited. He does not claim that the plaintiff had any other interest in the prints of the picture or publicity material which have been taken away by the defendants. He submitted that skill of the plaintiff gives him an interest in the prints and the publicity material. The prints and publicity material having been taken away, it is urged, illegally, the plaintiff at this stage is entitled to seek interim reliefs as prayed for in the application.

    14. Mr. K.K Mehra, learned counsel for the defendants has urged that the suit as well as the application are entirely misconceived. According to him on the plaintiff's own showing he cannot be said to have any interest in the property which forms subject-matter of the agency. Therefore, the agreement, if any, can be terminated. In support of his contention, Mr. Mehra relied upon decision in Dalchand v. Hazarimal AIR 1932 Nag. 34. In the said case the plaintiff had appointed the defendant as his agent for the sale of cloth by an agreement which entitled the defendant to retain part of the price of the cloth sold by him as his remunerations. The contract was entirely indefinite as to the time for which the agency was to continue. Jackson. J.C after analysing the provisions of S. 202 of the Contract Act and discussing the case law on the subject held that the defendant had no interest in the cloth which had been kept with him by the plaintiff for sale.

    15. Prim a facie the plaintiff herein cannot be said to have any interest in the subject-matter of the alleged agency. His case that because of his skill, he has acquired an interest in the subject-matter of the agency and as such is entitled to exploit and distribute the picture, at this stage, seems to me to be misconceived. Mr. Sapra was unable to cite any authority in support of his submission.

    16. Agent for exploiting a picture like an agent who is given cloth to sell has to have certain skill to carry out his work as such an agent, in Dalchand's case (AIR 1932 Nag 34) (supra) the agent who had a right to retain a part of the price of the cloth sold by him towards his remunerations was not held to be an agent as envisaged by S. 202 of the Contract Act. The plaintiff, according to his own case, was only to get commission after the accrual of the collection cannot thus prima facie be said to have any interest in the prints of the picture. As such he is not entitiled to an order restraining defendants 1 and 2 from exploiting or distributing or exhibiting the said picture in the, territory. In my view prima facie he is also not entitled to an order restraining defendants 1 and 2 from giving or transferring the rights of distribution, exploitation and exhibition of the said picture.

    17. It is the defendants' case that prior to the filing of the instant suit they had appointed defendant No. 3 as their agent for exploiting, exhibiting and distributing the picture in consideration of the amount of Rupees nine lacs. In view of this categorical averment of the defendants the prayer of the plaintiff for appointment of a receiver to take possession of the prints of the picture, is also liable to be rejected.

    18. Accordingly, the application is dismissed, but with no order as to costs.

    19. Order dated 23rd Jan. 1981, passed by me requiring the defendants to maintain status quo thus stands vacated.

    Application dismissed.
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    Comments

    Subhash Chandra Jain v. Feroze Khan And Others
    (Mar 20, 1981)