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2021 Supreme(Mad) 438
IN THE HIGH COURT OF JUDICATURE AT MADRAS
C.V. KARTHIKEYAN, J.
Aradhana Distributors Pvt. Ltd., Through its Director, Sanjay Kumar Patodia – Appellant
Versus
Renault India Pvt. Ltd., Chennai – Respondent
C.S. No. 621 of 2016
Decided On : 10-02-2021
For the Plaintiff :AR L. Sundaresan, Senior Counsel, A.K. Balaji, Advocate.
For the Defendant :G. Kalyan Jhabakh for M/s. Surana & Surana, Advocates.
Headnote:
The Plaintiff, a company engaged in selling automobiles, entered into a Dealership Agreement with the Defendant, an automobile manufacturer, for the sale and distribution of the Defendant's cars and SUVs in Kolkata. The agreement was initially for one year but was renewed for another year. However, the Defendant terminated the agreement before the expiry of the second year without giving any reason. The Plaintiff filed a suit against the Defendant seeking damages for breach of contract and loss of business.
Fact of the Case:
The Plaintiff claimed that it had suffered huge losses due to the Defendant's termination of the Dealership Agreement. The Plaintiff claimed that it had invested heavily in setting up a showroom, purchasing vehicles, and advertising the Defendant's products. The Plaintiff also claimed that it had lost profits and goodwill as a result of the termination of the agreement. The Defendant denied the Plaintiff's claims and contended that the termination of the agreement was justified.
Finding of the Court:
The Court found that the Defendant had breached the Dealership Agreement by terminating it without giving any reason. The Court also found that the Plaintiff had suffered losses as a result of the Defendant's breach of contract. The Court awarded the Plaintiff damages for the losses it had suffered.
Issues: 1. Whether the Defendant breached the Dealership Agreement by terminating it without giving any reason? 2. Whether the Plaintiff suffered losses as a result of the Defendant's breach of contract? 3. What damages should be awarded to the Plaintiff?
Ratio Decidendi: The Court held that the Defendant had breached the Dealership Agreement by terminating it without giving any reason. The Court also held that the Plaintiff had suffered losses as a result of the Defendant's breach of contract. The Court awarded the Plaintiff damages for the losses it had suffered.
Final Decision: The Court decreed the suit in favor of the Plaintiff and awarded damages of Rs. 4,52,32,396/- (Rupees Four Crores Fifty Two Lakhs Thirty Two Thousand Three Hundred and Ninety Six only) together with interest at 6% per annum from the date of the suit till date of realization and for costs.
JUDGMENT :
(Prayer: This suit filed under Order IV Rule 1 of O.S Rules R/w. Order VII Rule 1 of C.P.C., prayed for a Judgment and Decree against the Defendant to pay a sum of Rs.6,52,32,396/- the suit of the Plaintiff for a total sum of:
| Sl.No. | Description | Damages Suffered (Value in Rs.) |
| 1 | Plaintiff suffered huge losses on the accounts of Sales. | 1,22,33,963 |
| 2 | Plaintiff suffered amounts invested for setting up the Renault Specific Showroom. | 1,19,26,672 |
| 3 | Plaintiff suffered invested for advertisements to increase the brand of the defendant with the Plaintiff. | 15,09,691 |
| 4 | Plaintiff suffered on account of penalty and interests payable on the Channel Finance Facility from various Banks, on account of the fact that it took plaintiff more than one year to liquidate Plaintiff more than one year to liquidate termination on account of the facts and circumstances with the Plaintiff. | 1,50,16,287 |
| 5 | Plaintiff as money admittedly recoverable from the Defendant, as per the terms and conditions of the Dealership Agreement. | 42,00,000 |
| 6 | As the refund of the security, out of the total security amount of Rs.15,00,000/- out of which Rs.12,00,000/- has already been refunded. | 3,00,000 |
| 7 | As losses suffered on account of replacement of batteries of the vehicles which could not be sold within reasonable times. | 45,783 |
| 8 | As token loss of profits for the period 2014-2039 owing to the fact that a minimum span of the business was expected to be 25 years from the date of initiation. | 1,00,00,000 |
| 9 | As damages for the loss of reputation and name of the Plaintiff. | 1,00,00,000 |
3. The Plaintiff is a company engaged in the business of selling automobiles in Kolkata. The Plaintiff claimed experience in the dealership business of automobiles for more than 25 years as on the date of institution of the suit. They had occasion to work earlier with Royal Enfield, Hyundai Motors India Ltd., Honda Motorcycle and Scooter India Ltd., and FCA India Automobiles Private Limited. They claim that they have a reputation as automobile dealers for more than 75 years in Kolkata.
4. It had been stated in the plaint that the Defendant made advertisements claiming to be a prominent automobile company and calling for applications for dealership in Kolkata to sell Renault vehicles. The Plaintiff applied for dealership. The Defendant after scrutinizing the application and after thorough inspection, accepted the application of the Plaintiff as authorized dealer for the sale and distribution and after sales service of Renault cars and SUVs in the city of Kolkata.
5. A Letter of Intent dated 30.09.2010 was issued by the Defendant. The Plaintiff claimed that it had been agreed that the Plaintiff would be a dealer of the Defendant for a minimum period of five years. The Letter of Intent was for an indefinite period, but provided for a termination clause. The Plaintiff claimed that they understood that the period of dealership was for a long period of time. The Letter of Intent further stated that the Plaintiff has to obtain fresh true copies of ownership rights or tenancy rights for a minimum period of three to five years with an extension clause. This was for the premises to be established as sales showroom, service workshop and spare parts shop.
6. The Plaintiff had set up a dealership showroom as per specifications at No.19 J L Nehru Road, Kolkata West Bengal 700087. Further the Plaintiff had leased warehouses and workshop spaces at R S Dag No.790 Mouza Tardah Kapasati JL No.38, Police Kolkata Leather Complex, District 24, Parganas South, at a monthly rent of Rs.1,75,500/- and at Block B, Premises No.670, Uttarpanchanangram Paschim Chowbagha Kolkata, at a monthly rent of Rs.75,500/- and for storage / warehousing at No.173, AJC Bose Road, Kolkata, at a monthly rent
