- (1.) The appellant which is a public limited company incorporated under the Indian Companies Act, 1913, his its registered office at Calcutta, and branches in Bombay, Madras, New Delhi and Kanpur. The appellant carried on business in diverse lines, which may broadly be classified as (1) buying and selling on its own account, (2) introducing customers to principals (3) acting as managing agents, (4) acting as shipping agents, (5) acting as purchasing agents, (6) acting as sole importers and distributors on behalf of United Kingdom principals having no organisation in India and (7) acting as secretaries.
(2.) Since January 21, 1886, M/s. Gillanders Arbuthnot and Co., predecessors-in-interest of the appellant were the sole agents and distributors in India of explosives manufactured by the Imperial Chemical Industries (Export) Ltd. Glasgow, Scotland hereinafter called the principal company'. There was no written agreement between the principal company and M/s. Gillanders Arbuthnot and Co., incorporating the terms of the agency agreement. It is however common ground that the agency agreement was terminable at the option of the principal company. The appellant was incorporated for taking over the business of M/s. Gillanders Arbuthnot and Co., and since it took over the distributing agency the appellant acted as the sole agent and distributor of explosives manufactured by the principal company, but without a written agreement.
(3.) In May 1946 the principal company desired to set up its own organisation for distributing its products, and intimated the appellant that the agency, of the appellant may be cancelled after two or three years. By letter dated March 11, 1947, the principal company informed the appellant that the agency will stand terminated from April 1, 1948, and that it desired to compensate the appellant for termination of the agency on the following basis : (1) 'For the first three post-transfer years' the principal company shall pay to the appellant two-fifths of the commission accrued on actual sales in the territory of the latter's agency taken over by the principal company, such commission to be computed a the commission rates formerly paid to the appellant; (2) That "in the third post-transfer year," the principal company shall pay the appellant in addition a sum equivalent to full commission on the sales for that year effected by the principal company in the appellant's territory calculated at the same rates. (3) That payments would be made to the appellant after the end of each year as soon as the amount due was ascertained. Certain other matters in the letter which have a bearing on the dispute, may be reproduced : "For the purpose of calculating the commission due to you, the post-transfer will be deemed to run as from the date of the transfer of your agency to Imperial Chemical Industries (India) Ltd. We trust that you will find these proposals acceptable. As a condition of our paying you compensation on the basis outlined above, we would request you to be good enough to give us a formal undertaking to refrain from selling or accepting any agency for explosives or other commodities competitive with those covered by the agency agreement now being terminated. In this connection we are asking our Legal Department to prepare a formal agreement which we will submit to you for signature as soon as possible. It is common ground that no formal agreement in writing, which was contemplated to be taken from the appellant, was executed: not even a draft of the agreement was submitted by the principal company to the appellant.;