SHAKTI POTTERY WORKS Vs. VIRJIBHAI BECHARBHAI
LAWS(GJH)-1979-9-5
HIGH COURT OF GUJARAT
Decided on September 20,1979

SHAKTI POTTERY WORKS Appellant
VERSUS
VIRJIBHAI BECHARBHAI Respondents

JUDGEMENT

B.K.MEHTA, G.T.NANAVATI - (1.) This appeal at the instance of the original defendants is directed against the judgment and decree passed by Civil Judge (S. D.4) Surendranagar in Special Civil Suit No. 12 of 1973 ordering the defendants to pay to the respondent plaintiff an aggregate sum of Rs. 55 0 comprising of Rs. 50 0 being the amount of security deposit and Rs. 5 0 on account of commission earned by the plaintiff as a sole selling agents of the products manufactured by the defendants. A few facts need be stated in order to appreciate the contentions urged on behalf of the appellants in this appeal.
(2.) The original defendants Nos. 2 and 3 were the partners of the firm trading in the name and style of Shakti Pottery Works at Thangadh in Surendranagar district. The said firm was manufacturing potteries articles like China ware and stone ware and were selling their products in and outside the State of Gujarat. By an agreement of May 12 1967 the plaintiff was appointed sole selling agents for the products manufactured by the defendant No. 1 firm. This agreement was effective upto December 31 1970 The agreement was therefore renewed by a fresh agreement of 30 December 1970 for a period of two years. Again on 30th December 1972 a fresh agreement was executed for purposes of renewing the sole selling agency. According to the plaintiff the defendants had agreed and undertaken to pay commission at the rate of 4% on the sale priCe of the goods manufactured by defendant No. 1 firm. In consideration of his appointment as a sole selling agents the plaintiff had deposited a sum of Rs. 50 0 which was to be retained by the defendants till the agreement remained in force. It was the grievance of the plaintiff that in spite of the aforesaid obligation the defendants have failed to pay commission earned by him on the sales effected in the months of November and December 1972 It was his further grievance that the defendants have defaulted in payment of the commission earned on the sales effected in the months of January February and March 1973 However the defendants gave towards commission a cheque on 12-2-73 on the Thangadh branch of the State Bank of Saurashtra for Rs. 1106-56 to the plaintiff. The said cheque was dishonored with the result that the plaintiff had not been paid any commission on the sales effected in the months of January February and March 1973 The plaintiff was therefore entitled to recover at a time the amount of the deposit and the arrears of commission from the defendants in view of the condition contained in the agreement of sole selling agency that the defendants had to pay the amount of commission be 15th of every next month and in case of their default or failure to pay the amount of commission on account of any unexpected circumstances resulting in default having been committed for a period of more than three months the plaintiff was entitled to terminate the contract and to recover the amount of deposit as well as commission till due then at a time. The plaintiff learnt that the defendants were trying to transfer their factory with a view to defraud the creditors and therefore had by his telegram of April 2 1973 terminated the agency agreement and called upon the defendants to pay to him the deposit amount of Rs. 50 0 as well as commission due to him. Since the defendants failed to comply with the demand made in the notice he filed the suit in the Court of Civil Judge (S.D.) Surendranagar praying for a decree of Rs. 55 0 together with interest and costs of the suit.
(3.) The appellant defendants resisted the suit contending inter alia that the termination was wrongful inasmuch as the defendants had not committed any default which could entitle the plaintiff to terminate the contract and claim the refund of the deposit as agreed between the parties win the agency agreement. They also joined issue with the plaintiff that he was appointed as sole selling agents of the products of the defendants since the arrangement between the parties was in effect and substance in the nature of money lending and not that of agency as alleged by the plaintiff. They also denied that the plaintiff had earned commission of Rs. 5 0 on the sales of their products as averred by him in the plaint.;


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