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2014 DIGILAW 4545 (MAD)

Johnson & Johnson v. Shreem Enterpraises, represented by its Partners

2014-12-09

M.DURAISWAMY

body2014
Judgment : 1. The Civil Revision Petition arises against the fair and decreetal order passed in I.A.No.899 of 2013 in O.S.No.585 of 2013, on the file of the Principal District Munsif Court, Tiruchirappalli. 2. The revision petitioner is the defendant and the respondent is the plaintiff in the suit. The plaintiff filed the suit in O.S.No.585 of 2013 for the following reliefs: "(a) For a relief of declaration to declare that the stoppage of supply to the plaintiff from September 2012, by the defendant is null and void ab-initio, arbitrary, colourable, irrational, malafide, biased and against principles of natural justice; (b) for a relief of mandatory injunction directing the defendant to immediately restore the supply of the stocks regularly to the plaintiff's concern Shreem Enterpraises without any reservations; (c) for costs of the suit; and (d) for such other and further reliefs as this Honourable Court may deem fit and proper in the circumstances of the case" 3. The brief averments stated in the plaint are as follows: According to the plaintiff, they are running a registered partnership firm and have been doing business in dealing with Johnson and Johnson hospital products. The plaintiff is an authorized dealer for Johnson and Johnson for Tiruchirappalli District for more than 12 years. The plaintiff firm established and developed the sales of Johnson and Johnson products from Rs.One Lakh per month in 1999 to more than Rs.Twenty Lakhs per month. This business is the sole livelihood of the partners of the firm and they do not know any other business to do. At the time of taking partnership from the defendants to promote their products, the Officials of the defendant obtained the signature of the administrator on behalf of the partners in certain filled and unfilled forms. The plaintiff has no knowledge about the distributorship agreement dated 08.12.2010. The plaintiff relied upon a report published in a weekly namely Kumutham Reporter, which published a news item against the products of Johnson and Johnson. (ii) According to the plaintiff, a few years ago, Johnson and Johnson had sent a circular to all its dealers stating that they had information from the market that spurious products of Prolene Mesh were available in the market wherein they described the differences between the original and spurious products. (ii) According to the plaintiff, a few years ago, Johnson and Johnson had sent a circular to all its dealers stating that they had information from the market that spurious products of Prolene Mesh were available in the market wherein they described the differences between the original and spurious products. According to the plaintiff, without any reasonable reasons and without any cause but with malafide intention, the defendant Company suspended the supply of stocks to the plaintiff firm. By the act of the defendant, the plaintiff firm was put to hardship. 4. In these circumstances, the plaintiff filed the suit for the above mentioned reliefs. After the receipt of the suit summons, the defendants filed their written statement on 19.09.2013. Thereafter on 05.02.2014, the defendant filed an application in I.A.No.899 of 2013 under Order 7 Rule 11 of the Code of Civil Procedure to reject the plaint. 5. In the affidavit filed in support of the application in I.A.No.899 of 2013, the defendant has stated as follows: According to the defendant, the plaintiff approached them seeking to be appointed as one of its distributors in India. Accordingly the plaintiff was appointed as distributor of the defendant and such appointment was always for a specific period of time and subject to reappointment thereafter. The last such appointment of the plaintiff was made in 2010 on the terms and conditions specified in distributor agreement dated 08.12.2010. The said distributor agreement was valid for a period of three years i.e. upto 08.12.2013. Further the distributor agreement provided for termination of the appointment of the plaintiff as a distributor of the defendant by giving 30 days notice to the plaintiff without assigning any reason whatsoever. The agreement also provided for immediate termination of the appointment of the plaintiff as a distributor of the defendant under certain circumstances such as breach of terms of the distributor agreement, failure to render required services communicated by the representatives of the defendant, the plaintiff acting in a manner prejudicial to the interest of the defendants etc. (ii) In such circumstances, the defendant came to know about certain irregularities in the operations of the plaintiff and wrongful and questionable practices, misreporting sales and claiming wrong benefits from the defendants followed by the plaintiff in the execution of its operations as the distributor of the defendant. (ii) In such circumstances, the defendant came to know about certain irregularities in the operations of the plaintiff and wrongful and questionable practices, misreporting sales and claiming wrong benefits from the defendants followed by the plaintiff in the execution of its operations as the distributor of the defendant. Due to such wrongful and questionable practices, the defendants lost trust and faith in the plaintiff. By e-email dated 27.12.2012, the plaintiff had requested for the reasons for suspending supplies. On 22.01.2013, a meeting was conducted at the defendant's office at Chennai, which was attended by the officers of the defendants Company and Mr. K.Ramesh representing the plaintiff along with the plaintiff's advocate and auditor. (iii) In the said meeting, the reasons for suspension of supplies and the reasons why the defendant lost trust and faith in the plaintiff and informed to the plaintiff. The management of the defendant Company was contemplation termination of appointment of the plaintiff as a distributor of the defendant Company. However, even before the decision of termination could be formally issued by the management, the plaintiff has filed the suit. (iv) According to the defendants, the relief sought for by the plaintiff in the suit cannot be granted by the Court, in view of the well settled principle that a contract which in its nature determinable cannot be specifically enforceable as per Section 14(c) of the Specific Relief Act and a contract for the non-performance of which compensation in money is an adequate relief cannot be specifically enforceable as per Section 14(a) of the Specific Relief Act. According to the plaintiff, even if the suspension of supply from September 2012 is wrongful, then the plaintiff is entitled to claim compensation or damages and he cannot seek to extend the period of appointment of the distributorship by extending the distributor agreement beyond the aforesaid period. (v) According to the defendant, as per the provisions of the Specific Relief Act 1963, the plaint deserves to be rejected under Order 7 Rule 11(d) of the Code of Civil Procedure. Any alleged disputes between the parties ought to be resolved by initiating arbitration proceedings. In these circumstances, the defendant prayed for rejection of the plaint. 6. The plaintiff in their counter affidavit have stated that they have no knowledge about the distributor agreement. The plaintiff reiterated the averments stated in the plaint, in the counter affidavit filed by them. Any alleged disputes between the parties ought to be resolved by initiating arbitration proceedings. In these circumstances, the defendant prayed for rejection of the plaint. 6. The plaintiff in their counter affidavit have stated that they have no knowledge about the distributor agreement. The plaintiff reiterated the averments stated in the plaint, in the counter affidavit filed by them. The plaintiffs also relied upon the order passed by the trial Court in I.A.No.389 of 2013 wherein the plaintiff also filed an application in I.A.No.389 of 2013 for interim injunction and the trial Court while dismissing the application held that the issue whether the defendants had rightly stopped the supply of stocks or not has to be analysed only after the trial. Further the plaintiff has stated that since the agreement itself is in question, the same can be decided only at the time of trial. In these circumstances, the plaintiff prayed for dismissal of the application. The trial Court, after taking into consideration the case of both parties, dismissed the application. Aggrieved over the same, the defendants have filed the above Civil Revision Petition. 7. Heard Mr. Krishna Srinivasan for Mr. S.Rama Subramanian learned Counsel appearing for the petitioner and Mr. V.G. Kamalesh, learned Counsel appearing for the respondent. 8. The learned Counsel appearing for the petitioner submitted that under Sections 14(a) and 14(c) of the Specific Relief Act, the suit filed by the plaintiff is liable to be rejected. The learned Counsel submitted that the relief sought for by the plaintiff in the present suit cannot be granted by the trial Court, since a contract which in its nature determinable cannot be specifically enforceable as per Section 14(c) of the Specific Relief Act and a contract for non performance of which compensation in money is an adequate relief cannot be specifically enforceable as per Section 14(a) of the Specific Relief Act. Therefore, the learned Counsel submitted that the suit filed by the plaintiff is barred under Section 14 of the Specific Relief Act. In support of his contention, the learned Counsel relied upon the following judgments: (i) In Indian Oil Corporation Ltd., Vs. Therefore, the learned Counsel submitted that the suit filed by the plaintiff is barred under Section 14 of the Specific Relief Act. In support of his contention, the learned Counsel relied upon the following judgments: (i) In Indian Oil Corporation Ltd., Vs. Amritsar Gas Service and Others reported in (1991)1 SCC 533 , wherein the Honourable Apex Court held that granting of relief of restoration of distributorship on finding of breach of contract committed by the respondent is contrary to Section 14(1), the relief that could be granted of compensation for period of notice. (ii) In Hindustan Petroleum Corporation Ltd., Vs. Pinkcity Midway Petroleums reported in (2003)6 SCC 503 , wherein the Honourable Supreme Court held that the Civil Court had no jurisdiction to entertain a suit after an application under Section 8 of the Arbitration and Conciliation Act, 1996, is made for arbitration. The refusal to refer the dispute to arbitration would amount to failure of justice as also causing irreparable injury to the appellant. (iii) In T.Arivandandam Vs. T.V.Satyapal and Another reported in (1977)4 SCC 467 wherein the Honourable Apex Court held as follows: "5. We have not the slightest hesitation in contemning the petitioner for the gross abuse of the process of the court repeatedly and unrepentantly resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending before the First Munsif's Court, Bangalore, is a flagrant misuse of the mercles of the law in receiving plaints. The learned Munsif must remember that if on a meaningful -- not formal -- reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order VII Rule 11, C.P.C. taking care to see that the ground mentioned therein is fulfilled. And, if clear drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order X, C.P.C. An activist Judge is the answer to irresponsible law suits. The trial Courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage. The Penal Code is also resourceful enough to meet such men, (Ch.XI) and must be triggered against them. The trial Courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage. The Penal Code is also resourceful enough to meet such men, (Ch.XI) and must be triggered against them. In this case, the learned Judge to his cost realised what George Bernard Shaw remarked on the assassination of Mahatma Gandhi "It is dangerous to be too good." 9. Countering the submissions made by the learned Counsel for the revision petitioner, the learned Counsel appearing for the respondent at the outset submitted that the Civil Revision Petition filed by the defendants is not maintainable, since only an appeal shall lie as against the dismissal of the application filed Order 7 Rule 11 of the Code of Civil Procedure. The learned Counsel submitted that since the plaintiff is challenging the very distributor agreement itself, the present suit filed by the plaintiff is maintainable. That apart, the learned Counsel also submitted that since the issue involved is with regard to the validity of the distributor agreement, only the civil Court has jurisdiction to try the matter. In support of his contentions, the learned Counsel relied upon the following judgments: (i) In the Ootacamund Club, represented by its Secretary Vs. H.S.Mehta reported in 2009(5) CTC 627 , wherein this Court held that the order dismissing the application filed under Order 7 Rule 11 of the Code of the Civil Procedure is to be construed as judgment and therefore, only an appeal shall lie as against the said order. (ii) In T.Mohanraj Vs. Akila Thiruvidancore Siddha Vaidhya Sangam, Munichirai, Puddukkadai Post, K.K.District reported in 2011(3) MWN (Civil) 787, wherein the Division Bench of this Court held that an application cannot be rejected merely on the ground that there is every likelihood of relief claimed by plaintiff would not be granted. (iii) In Arul Singh and Others Vs. Sunil Kumr Singh and Others reported in 2008(2)CTC 856, wherein the Honourable Supreme Court held that in a suit for declaration to declare the reconstituted partnership deed as illegal and void, the relief of such declaration could be granted only by a Civil Court and not by Arbitrator. Therefore, the Honourable Apex Court held that the application for referring the matter to Arbitration was not proper. 10. Therefore, the Honourable Apex Court held that the application for referring the matter to Arbitration was not proper. 10. On a careful consideration of the materials available on record and the submissions made by the learned Counsel appearing for the revision petitioner and the learned Counsel appearing for the respondent, the contention raised by the learned Counsel for the respondent that the Civil Revision Petition is not maintainable in view of the judgment of this Court in the Ootacamund Club, represented by its Secretary Vs. H.S.Mehta reported in 2009(5) CTC 627 , shall not hold good for the reason that the Division Bench of this Court in its judgment dated 28.08.2014 in C.R.P.(PD)No.1436 of 2013 in M.Ravichandran Vs. G.Suresh Babu @ Vincent held that an order declining to reject the plaint filed under Order 7 Rule 11 of the Code of Civil Procedure passed by a Court and Subordinate to High Court, only a revision shall lie and no appeal is maintainable. In view of the judgment of the Division Bench of this Court, the contention raised by the learned Counsel for the respondent with regard to the maintainability of the Civil Revision Petition is rejected. 11. On a perusal of the averments stated in the suit, it could be seen that the plaintiff is also questioning the validity of the agreement. It is no doubt as per Clause 46 of the Distributor agreement, the dispute between the parties have to be settled by arbitration under the Arbitration Act. 12. In the case on hand, since the plaintiff is questioning the very distributor agreement itself, in view of the judgment of the Honourable Apex Court, in Arul Singh and Others Vs. Sunil Kumr Singh and Others reported in 2008 (2) CTC 856, the matter need not be referred to arbitration and the relief of such declaration can be granted by the civil Court. Therefore, the contention raised by the revision petitioner that because of the arbitration clause mentioned in the distributor agreement, the suit is liable to be rejected cannot be accepted. Accordingly, the said contention is decided in favour of the respondent. 13. Therefore, the contention raised by the revision petitioner that because of the arbitration clause mentioned in the distributor agreement, the suit is liable to be rejected cannot be accepted. Accordingly, the said contention is decided in favour of the respondent. 13. According to the revision petitioner, the distributor agreement between the plaintiff and the defendants Company also provided for termination of the appointment of the plaintiff as a distributor by giving 30 days notice to them without assigning any reason whatsoever, therefore, the agreement cannot be specifically enforceable as per Section 14(c) of the Specific Relief Act. Further, the petitioner contended that the distributor agreement was only for a period of three years i.e. till 08.12.2013. Therefore, the agreement had lapsed on 08.12.2013, since it was not extended thereafter. That apart, the petitioner also contended that even assuming that the agreement was wrongfully terminated by the defendant, in that case the plaintiff can only claim compensation or damages for the wrongful termination without notice and damages would be an adequate remedy, therefore, the distributor agreement cannot be specifically enforceable as per Section 14(a) of the Specific Relief Act. 14. The respondent contended that there was no written distributor agreement and the alleged agreement is not true and genuine. Further they have contended that even without notice and against the principles of natural justice, the agreement was terminated. Further the respondent contended that in view of the order passed in I.A.No.389 of 2013, the present petition filed for rejection of the plaint is barred by principles of res judicata. 15. It is not in dispute that the plaintiff was an authorised dealer for Johnson and Johnson for a period of 12 years. On a perusal of the distributor agreement it is clear that it has been clearly decided that the appointment will remain in force for a period of three years. However the defendants had the liberty to extend the time by three more years. Further though the agreement is dated 08.12.2010, it was signed on different dates. The contention of the defendants is that the remedy available to the plaintiff to file the suit for compensation or damages is concerned, there is no clause mentioned in the distributor agreement regarding the compensation for nonperformance of the contract by either party. 16. That apart in the case on hand, the plaintiff is also questioning the very execution of the distributor agreement. 16. That apart in the case on hand, the plaintiff is also questioning the very execution of the distributor agreement. There is a clause regarding the termination of the agreement by giving 30 days notice to the other party and also the clause permitted either of the party for revoking the agreement. Though the defendant contended that there was a meeting prior to the decision, the plaintiff denied any such meeting. That apart, the defendant Company has not produced any document to prove that there was a meeting prior to the stoppage of supply. That apart, there is nothing on record to show that the defendant issued notice to the plaintiff for stopping the supply. In the absence of any proof with regard to the issuance of notice to the plaintiff, the trail Court has rightly held that Section 14(a) and 14(c) of the Specific Relief Act has no application. Further the issues involved in the suit can be decided only after full-fledged trial. 17. It is settled position that an application filed under Order 7 Rule 11 of the Code of Civil Procedure to reject the plaint should be filed based on the averments stated in the plaint and it would not be proper to file a petition to reject the plaint after filing of the written statement. In the case on hand, the defendant filed their written statement on 19.09.2013 and the present application under Order 7 Rule 11 of the Code of Civil Procedure was filed on 08.10.2013 i.e., after filing of the written statement by the defendants. Therefore, when there is a dispute with regard to the execution of the distributor agreement itself, the suit cannot be rejected under Section 14(1)(a) and 14(1)(b) of the Specific Relief Act. The trial Court has rightly dismissed the application filed under Order 7 Rule 11 of the Code of Civil Procedure. 18. The trial Court shall dispose of the suit on merits and in accordance with law independently without being influenced by any of the observations given in this Civil Revision Petition and also in the order passed in I.A.No.899 of 2013. 19. In these circumstances, I do not find any error or irregularity in the order passed by the trial Court. Accordingly, the Civil Revision Petition is devoid of merits and the same is dismissed. Consequently, the connected Miscellaneous Petition is also dismissed. 19. In these circumstances, I do not find any error or irregularity in the order passed by the trial Court. Accordingly, the Civil Revision Petition is devoid of merits and the same is dismissed. Consequently, the connected Miscellaneous Petition is also dismissed. However, there shall be no order as to costs.