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Delhi Gate Service Private Ltd. Vs. Caltex (India) Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtPunjab and Haryana High Court
Decided On
Case NumberSecond Appeal No. 226-D of 1961
Judge
Reported inAIR1962P& H370
ActsSpecific Relief Act - Sections 42, 54 and 55; Court-fees Act - Sections 7
AppellantDelhi Gate Service Private Ltd.
RespondentCaltex (India) Ltd.
Cases ReferredSisir Kumar v. Susil Kumar
Excerpt:
.....under article 227 of the constitution. - the gist of all these agreements was that the delhi gate company was required to sell only such quantities of petroleum products and hi-speed diesel oil as were supplied to them by the caltex company, to whom no liability was attached for any failure or refusal to make supplies, and the agreements were terminable by either party on giving one month's notice. (3) a fourth agreement was entered into between the parties on the 1st december 1956, called the 'service station agreement' in which the delhi gate company was clearly described as a licensee under the caltex company and entitled only to temporary use of the service station in common with the caltex company during the continuance of the petrol dealers' agreement. to the caltex company..........to the supply and sale of diesel fuel. the gist of all these agreements was that the delhi gate company was required to sell only such quantities of petroleum products and hi-speed diesel oil as were supplied to them by the caltex company, to whom no liability was attached for any failure or refusal to make supplies, and the agreements were terminable by either party on giving one month's notice.(3) a fourth agreement was entered into between the parties on the 1st december 1956, called the 'service station agreement' in which the delhi gate company was clearly described as a licensee under the caltex company and entitled only to temporary use of the service station in common with the caltex company during the continuance of the petrol dealers' agreement. it was specified in the.....
Judgment:

(1) These two appeals by a company, Messrs Delhi Gate. Services Private Ltd., Delhi, have arisen out of cross suits filed by the appellants and the respondents, Messrs Caltex (India) Ltd., Delhi, which were consolidated at the stage of trial, the suit in which the appellants are the plaintiffs being dismissed and that of the respondents decreed. Both these orders were upheld in first appeal.

(2) The facts are that the appellant company entered into a petrol dealers agreement in the standard from with the Caltex company on the 1st of August 1952. This was followed by a second agreement called the equipment and loan agreement dated the 9th of March 1953, under which the Caltex Company agreed to supply equipment to the company at a nominal rent of Re. 1/- p.m. A third agreement was entered into also in the standard form on the 15th of September 1955, relating to the supply and sale of diesel fuel. The gist of all these agreements was that the Delhi Gate company was required to sell only such quantities of petroleum products and Hi-speed diesel oil as were supplied to them by the Caltex Company, to whom no liability was attached for any failure or refusal to make supplies, and the agreements were terminable by either party on giving one month's notice.

(3) A fourth agreement was entered into between the parties on the 1st December 1956, called the 'Service Station agreement' in which the Delhi Gate Company was clearly described as a licensee under the Caltex company and entitled only to temporary use of the service station in common with the Caltex Company during the continuance of the petrol dealers' agreement. It was specified in the agreement that during the continuance of the licence the Delhi Gate Company would remain in sole possession of the property, but this would not be construed as creating any right, interest or tenancy in their favour and their position would remain merely that of licensees and they would be required to pay a licence-fee at the rate of 9 pies per gallon of petrol and 2 pies per gallon of diesel fuel purchased by them from the Caltex Company. This was substituted for the Rent of Re. 1/- per mensem. It was further specified that the agreement would cease in so facto on the termination of the original petrol dealers' agreement dated the 1st of August 1952.

(4) On the 24th of March 1958, the Caltex Company served a notice on the Delhi Gate Company terminating the dealership agreement with effect from the 24th of April 1958. By a letter dated the 23rd of April 1958 the Delhi Gate Company was also informed of the intention of the Caltex Company of immediately taking possession of the equipment and premises.

(5) Before this letter was received, on the 19th of April 1958, the Delhi Gate Company instituted a suit for a declaration that the termination of the petrol dealers' agreement and the Hi-speedol agreement by the Caltex Company was illegal, arbitrary and against the principles of natural justice and also for a permanent injunction restraining the Caltex Company from withholding the supplies of petrol and diesel fuel from the plaintiffs and from forcibly evicting the plaintiffs from the premises in dispute. The grounds on which this declaration and injunction were sought were that the site of the service station had been secured for the Caltex Company by the father of the managing director of the plaintiff company by dint of great efforts, and that in spite of the terminology in the agreements between the parties there was a definite understanding that the plaintiffs were to be treated as tenants and not merely licensees. In fact they were given an undertaking, even after the agreement of 1956, that there would be no termination of the agreements in accordance with its terms.

(6) The Caltex Company denied the Plaintiffs' allegations of fact and maintained that the agreements had been validly terminated. The Court framed these issues in the case of the Delhi gate Company:

(1) Whether the termination of the two agreements in dispute is illegal, wanton and arbitrary etc. as alleged and if so to what effect?

(2) If issue No. 1 is proved, whether the defendant is entitled to the relief claimed and can the reliefclaimed be specifically enforced?

(3) Whether the plaintiffs are tenants in the suit premises?

(4) Whether the plea taken up in issue No. 3 is open to the plaintiffs?

(5) If issues Nos. 3 and 4 are proved, whether the plaintiffs are liable to be dispossessed forcibly?

(6) Relief.

(7) The cross suit was instituted by the Caltex Company in February 1959 under Section 54 of the Specific Relief Act for an injunction directing the Delhi Gate Company to vacate the premises including two petrol pumps, a storage tank and other equipment of the Caltex Company and to restore the premises etc. to the Caltex Company in a good condition. The objections of the Delhi Gate Company regarding the maintainability of the suit and its valuation were overruled at a preliminary stage and the issues were framed:

(1) Whether this suit has been instituted property?

(2) Whether the defendants are licensees of the plaintiffs in the suit premises?

(8) All the essential points were decided by lower Court in favour of the Caltex Company with the result that the suit of the Delhi Gate Company was dismissed and that of the Caltex Company decreed.

(9) There points have been argued before me on behalf of the Delhi Gate Company, firstly that the suit of the Caltex Company was not properly instituted; secondly that the suit was not maintainable in the form in which it was brought, and should have been brought as a suit for possession; and thirdly that the Delhi Gate Company was the tenant and not a licensee of the Caltex Company. The first of these points whether the person who signed and verified the plaint was duly authorised by the Caltex Company is clearly a question of fact which cannot now be reopened.

(10) On the second point it was contended that even on the assumption that it had been correctly found that the Delhi Gate Company was a licensee of the Caltex Company nevertheless, on the termination of the licence it was necessary for the Caltex Company to institute a suit for possession and not merely a mandatory injunction under Section 55 of the Specific Relief Act. In deciding this point in favour of the Caltex Company the Courts below have relied on the decision of Renupada Mukherjee, J. in Prabirendra Nath v. Narendra Nath, AIR 1958 Cal 179. This related to a case in which a nephew of the owner of a house had been permitted to occupy a portion of it as a licensee, and when he refused to leave the legal representatives of the licensor, who had died, brought a suit for a mandatory injunction directing him to vacate the premises, and it was held in second appeal that the suit in this form was maintainable. The learned counsel for the appellants has not been able to cite any direct authority to the contrary.

There can be no quarrel with the decision of the Full Bench in Kandaswami Thambiran V. Vagheesam Pillai, AIR 1941 Mad 822 (FB), in which it was held that the office of a Mahant cannot be separated from the properties which form the endowments of the office and that a plaintiff who is seeking for a declaration of his title to the office of a Mahant and who is not in possession of its properties must by reason of Section 42 of the Specific Relief Act ask for possession. Clearly no question of the effect to termination of contracts arose at all in that case in which the provisions of Section 42 of the Specific Relief Act were under consideration according to which a suit for a mere declaration will not lie when any consequential relief can also be claimed. The facts were also completely different in Abdul Nabi v. Bajan Sahib, AIR 1944 Mad 221 in which it was found that the defendant who was in possession of some property as agent of the plaintiff had renounced the agency and set up title in himself as donee and by adverse possession and refused to surrender possession to the plaintiff and the plaintiff filed a suit for injunction against the defendant for restraining the defendant from interfering with the plaintiff's peaceul possession and enjoyment of the property without putting forward a claim for possession. In that case it was rightly held that the suit for permanent in junction was not maintainable.

(11) The appellants may derive some support from the decision of the Special Bench of three Judges in Sisir Kumar v. Susil Kumar, AIR 1961 Cal 229 (SB), to the effect that the valuation of a suit for ejectment of a licensee upon revocation or termination of his licence either for purpose of court-fees or for the purpose of jurisdiction shall be made under the provisions of Section 7(v) of the Court-fees Act i.e., ad valorem on the value of the property, but the learned Judges in this case were simply considering a question regarding Court-fee which had been referred to the, and the question was never mooted or considered whether a suit of this kind could be brought under Section 55 of the Specific Relief Act.

(11a) Section 55 reads:

'When to prevent the breach of an obligation it is necessary to compel the performance of certain acts which the Court is capable of enforcing, the Court may in its discretion grant an injunction to prevent the breach complained of, and also to compel performance of the requisite acts.'

At this stage I may reproduce some of the terms of the most important of the agreements between the present parties, the so-called 'Service Station Agreement' which is headed 'Service Station Licence Agreement'. In this the Caltex Company is referred to as the company and the Delhi Gate Company as the licensees and thereafter occur the words:

' And whereas the licensees have on the Ist with the company known as the 'Petrol Dealer Agreement' under which the licensees are permitted on the terms and conditions mentioned therein to sell the company's petroleum products by retail and whereas the company is owner/lessee of the land hereditaments and premises situate at Delhi Gate, Delhi, and is the owner of the petrol and lubricating service station erected thereon which includes the buildings erected thereon, petrol pumps, storage tank, pipes and fittings and all other facilities at the site erected or set up for the use of motorists (all which including the site are hereinafter referred to as the service station) and whereas the company has agreed to allow the licensees to sell the company's petroleum products by retail from the service station for the consideration and on the terms and conditions hereinafter mentioned, now it is hereby agreed as follows: ' The company hereby grants licence to the licensees to resort to and have temporary use of the service station in common with the company and all other persons having a like right during the continuance of the said Petrol Dealer Agreement solely and entirely for the purpose of carrying on retail business of the company's products at the service station subject to the terms and conditions contained in the said Petrol Dealer Agreement and to such laws and rules as may be made from time to time by the Central Government or any State government or local authorities in that behalf and for no other purposes, on the terms and conditions following.'

Condition (1) reads:

'The service station shall at all times during the continuance of this licence be and remain absolute property and in sole possession of the company. The temporary use of the service station by the licensees for the purpose of retail sale the company's products shall be in common with the company and all other persons having a like right. This agreement shall not be construed as creating any right, interest or tenancy in favour of the licensees in respect of the service station.'

For the printed clause (12) the following typed clause is substituted:

'The licensees shall pay to the company a licence-fee at the rate of 9 pies per gallon of petrol and / or petrol admixed with power alcohol/benzo and 2 pies per gallon on Hi-speedol purchased by the licensees from the company for retailing through the service station during the temporary use of the service station as aforesaid by the licensees.'

Clause (15) reads:

'This agreement shall ipso facto cease and determine on the termination by either party of the said Petrol Dealer Agreement for any cause whatsoever.'

Clause (18) reads:

'In the event of termination of this agreement the licensees shall immediately leave the service station and the company's equipment and property including any books, records, accounts, stubs etc., in good condition and repair and shall not claim any rights therein or in any part thereof by reason of any act or thing done by the licensees during the continuance of this agreement whether with or without the knowledge and or consent of the company. The licensees shall also immediately remove their goods, if any, and all such goods not so removed within seven days of such goods not so removed within sever days of such termination may be removed by the company at the licensees' risk and cost and the company shall be under no obligation whatsoever to take any steps for the protection thereof and shall not in any way be responsible for loss of or damage thereto.'

(12) In view of these terms in the agreement between the parties I cannot see how there is any possible legal bar to the suit brought by the Caltex Company under section 55 of the Specific Relief Act, I may add that even if such a bar had been found to exist, I should have had no hesitation in the circumstances in permitting the company even at this stage to amend its plaint so as to make the suit one for possession and allowing the necessary court-fee to be deposited.

(13) This discussion has to some extent overlapped the third point raised on behalf of the appellants, namely that the Delhi Gate Company was a tenant and not a licensee. In the face of the terms of the agreement set out above I cannot see how it is possible seriously to contend that the Delhi Gate Company was a tenant and not a licensee of the Caltex Company. It may be true, as was found by the trial Court, that the father of the Managing Director of the company had been of considerable assistance to the Caltex Company in obtaining the site of the service station, but it is a far cry from this to hold that on this account the Caltex Company had an oral understanding with the appellants, even after the execution of the Service Station Agreement, that its terms were to be ignored, and that they would be permitted to remain indefinitely in occupation of the service station premises as tenants. It is indeed a finding of fact which cannot be disturbed in second appeal that there was no such agreement, but in any case it appears to be so unlikely as to be almost incredible that a company like the Caltex Company. Which has to deal with thousands of dealers, should have had an unofficial understanding contrary to the terms of the standard agreement with dealers with the appellants. I am therefore of the opinion that both the suits were rightly decided by the Courts below and I dismiss the appeals with costs.

Appeals dismissed.


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