M/S VIJAY TRADERS versus M/S BAJAJ AUTO LTD.

Citation: [1995] SUPP. 4 S.C.R. 625 · Decided: 01-11-1995 · Supreme Court of India · Bench: FAIZAN UDDIN, S.C. SEN · Disposal: Dismissed
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Judgment (excerpt)

MIS VI.IA Y TRADERS 
v. 
MIS BAJAJ AUTO LTD. 
NOVEMBER 1, 1995 
[FAIZAN UDDIN AND S.C. SEN, .JJ.] 
Indian Contract Act, 1872 : 
Ss. 182, 206---'Agent'-Defendants appointing plaintiffs as their dis-
tributors-Contract tenninated by defendants after giving notice-Suit by 
plaintiffs for damages for wrongful tennination of agency-Plaintiffs claiming 
relationship of agent and principal between parties-Evidence adduced estab-
lishing that distributor would pay p1ice of goods ordered and delivery was to 
be given on payment of p1ice-Risk with regard to damage during transit to 
A 
B 
c 
be suffered by dist1ibuto,-He/d, contract between parties was one of purchase D 
and sale and not of agency-15 days notice not unreasonable for !ennination 
of distributership. 
The plaintiff - appellants, a trading firm, filed a suit for damages for 
wrongful termination of agency and for rendition of accounts against the 
defendant - company, manufacturers of Vespa Scooter and Vespa auto -
rikshaws (Vespa Commercials), alleging that the latter appointed the 
plaintiff as their permanent sole selling agent for Vespa Scooters and 
Vespa Commercials in the district of Ahmednagar and thus they were the 
sole distributors of the said vehicles and the appointment was irrevocable. 
E 
It was stated that the plaintiff secured orders for vehicles on behalf of the 
F 
defendants and the appointment constituted an agency coupled with inter-
est, and the relationship between the parties was that of principal and 
agent. The defendants denied the relationship of agent and principal 
between the parties and pleaded that their relationship was principal to 
principal; that the plaintiffs were never required to procure any orders G 
from customers on behalf of the defendants; the plaintiffs were appointed 
as ordinary distributors and the defendants had a right to terminate the 
contact at any time at their sole discretion. The Trial Court dismissed the 
suit holding that there was no relationship of agent and principal between 
the parties. Having failed before the High Court, the plaintiffs filed the 
appeal by special leave. 
625 
H 
626 
SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R. 
A 
Dismissing the appeal, this Court. 
B 
HELD : 1. The contents of letter dated 9.10.1964, by which the 
plaintiffs were appointed as dealers/distributors by the defendants of thdr 
products, do not envisage any relationship between the parties as that of 
agent and principal but it relates to the appointment of the plaintiffs as 
distributors and not as an agent to sell the products of the defendants to 
purchasers. (630-C, F] 
2.1. Though the terms of the contract are not clearly spelt out from the 
letter appointing the plaintiffs as distributors, it is clear from the evidence 
C that the contract provided that the distributor will pay the price of the 
vehicles ordered and delivery was to be given to the plaintiffs on payment of 
price. The defendant-Company took no risk with regard to the damage 
caused to the vehicles during transit and the same had to be suffered by the 
plaintiff-firm. Thus the contract between the plaintiffs and the defendants 
would be one of purchase and sale and not of any agency. (632-E] 
D 
2.2. It cannot be disputed that even an agent can become a purchaser 
when the agent makes payment of the price to the principal on his own 
responsibility. In such a circumstance the agreement would be one between· 
vendor and purchaser and not one of principal and agent. (631-G] 
E 
State of Mysore v. Mysore Spinning and Manufactwing Company 
F 
Limited, AIR (1958) SC 1002 and Gordon Woodroffe and Co. v. S.KMA. 
Majid and Co., AIR (1981) SC 967, relied on. 
3. Since there was no relationship of agent and principal between the 
plaintiffs and defendants, the l(Uestion of application of section 206 of the 
contract Act did not arise. However the respondent-company had given a 
notice terminating the distributorship after about 15 days from the date 
of receipt of said notice. The said period of IS days cannot be said to be 
unreasonable for termination of distributorship. (632-D] 
G 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4600 of 
1984. 
From the Judgment and Order dated 27.1.82 of the Bombay High 
Court in F.A. No. 590 of 1974. 
H 
Kishan Mahajan, 
P.H. Parekh and Ms. Shefali S. Fazi, for the 
VUAYTRADERSv. BAIAI AUTO LTD. [FAIZAN UDDIN,J.j 
627 
appellants. 
V.N.Ganpule, Satish K. Agnihotri, Ms. Pimam Kumari and A.B.L. 
Saxena for the Responde
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