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2023 Supreme(Mad) 2658
IN THE HIGH COURT OF JUDICATURE AT MADRAS
ABDUL QUDDHOSE, J.
Ford India Private Limited, Original represented by Authorised Signatory – Appellant
Versus
VSN Commercials Private Limited, Telengana & Another – Respondents
Original Application Nos. 698 & 699 of 2023 & Arb. Appln. No. 426 of 2023
Decided On : 29-08-2023
For the Appellants:R. Yashod Vardhan, Senior Counsel, For the Respondents:P. Vinod Kumar, M/s. J. Sagar Associates, Advocates, R1, Satish Parasan, Senior Counsel, T. Saikrishnan, R2, P.S. Raman, Senior Counsel, Adarsh Ramanujam, Advocate.
The court established that the first respondent had not breached the agreement and that the sale of the property made it impossible for them to retain the dealership at the same place, applying the principle of impossibility of performance under Section 56 of the Indian Contract Act, 1872.
Headnote:
Arbitration and Conciliation Act - Injunction - Section 9 (ii)(d) - Dealer Service Agreement - 29.10.2021
Fact of the Case:
The applicant, a manufacturer of Ford cars, sought injunctions to prevent the first respondent from using or discontinuing their service dealership at a specific location pending resolution of a dispute. The first respondent had sought approval to relocate the dealership to a new location, which the applicant initially approved but later objected to.
Finding of the Court:
The court found that the first respondent had not committed a breach of the dealer service agreement and had taken steps to relocate the dealership with the applicant's initial approval. The court also noted that the sale of the property where the dealership was located had made it impossible for the first respondent to retain the dealership at the same place.
Issues: The main issue was whether the first respondent could be prevented from relocating the dealership, and whether the applicant was entitled to the injunction relief.
Ratio Decidendi: The court held that the first respondent had not breached the agreement and that the applicant's initial approval for relocation estopped them from objecting later. The court also applied Section 56 of the Indian Contract Act, 1872, to determine that the sale of the property made it impossible for the first respondent to retain the dealership at the same place.
Final Decision: The court dismissed the original applications seeking injunction relief and allowed the arbitration application to vacate the previous injunction order.
JUDGMENT
(Prayers in O.A. No.698 of 2023: Original Application filed under XIV Rule 8 of Original Side Rules read with Section 9 (ii)(d) of the Arbitration and Conciliation Act, 1996 to pass an order of injunction restraining the first using the presmies at Survey No.33, Medchal Highway NH-44, near Bowenpally Checkpost, Secundarabad-500 011, for any purpose other than the service dealership of the applicant as per the Dealer Service Agreement dated 29.10.2021 pending resolution of the dispute between the parties by the arbitral tribunal.
in O.A. No.699 of 2023: Original Application filed under XIV Rule 8 of Original Side Rules read with Section 9 (ii)(d) of the Arbitration and Conciliation Act, 1996 to pass an order of injunction restraining the first respondent from in any manner discontinuing their service dealership located at Survey No.33, Medchal Highway NH-44, near Bowenpally Checkpost, Secundarabad-500 011 pursuant to the Dealer Service Agreement dated 29.10.2021 pending resolution of the dispute between the parties by the arbitral tribunal.
in Arb.Appln. No.426 of 2023: Application filed under XIV Rule 8 of Original Side Rules to vacate the order dated 09.08.2023 passed exparte in O.A. No.698 of 2023.)
Common Order
1. Original Application No.698 of 2023 has been filed by the applicant seeking for an order of injunction to restrain the first respondent from using the premises at Survey No.33, Medchal Highway NH-44, near Bowenpally check post, Secundarabad-500011, for any purpose other than the service dealership of the applicant as per the Dealer Service Agreement dated 29.10.2021, pending resolution of the dispute between the parties by the Arbitral Tribunal.
2. Original Application No.699 of 2023 has been filed by the applicant seeking for an order of injunction to restrain the first respondent from in any manner discontinuing their service dealership located at Survey No.33, Medchal Highway NH-44, near Bowenpally check post, Secundarabad-500011 pursuant to the Dealer Service Agreement dated 29.10.2021 pending resolution of the dispute between the parties by the Arbitral Tribunal.
3. Arbitration Application No.426 of 2023 has been filed to vacate the order dated 09.08.2023 passed exparte by this Court in O.A. No.698 of 2023.
4. The applicant in Original Application Nos.698 and 699 of 2023 was a manufacturer of Ford brand of Cars in India. Due to operational losses, they had to stop manufacturing in India. Some of the Dealers of the applicant, who were earlier selling and servicing Ford Cars in India under a Dealership agreement, were later appointed as an authorised service centre of the applicant to service the Ford Cars in India instead of both selling and servicing the Ford Cars . One such entity is the first respondent in the Original Applications. A fresh Dealer Service Agreement dated 29.10.2021 was entered into between the applicant and the first respondent in substitution of the earlier Dealership Agreement, which had authorised the first respondent to both sell and service the Ford Cars manufactured by the applicant. Under the fresh Dealer Service Agreement dated 29.10.2021, the first respondent was authorised to service the cars manufactured by the applicant at Survey No.33, Medchal Highway NH-44, near Bowenpally check post, Secundarabad-500011. The Dealer Service Agreement dated 29.10.2021 is for a period of five years. Under the Dealer Service Agreement dated 29.10.2021, the first respondent undertook to operate three authorised service outlets for five years and one of them is at the place (Bowenpally) more fully described in the schedule to the judges summons.
5. Under the Dealer Service Agreement dated 29.10.2021, the first respondent with the prior approval of the applicant is empowered to relocate the existing outlet to any other location. The first respondent through its communication dated 04.08.2022 to the applicant sought approval for relocating the existing outlet (Bowenpally) to another nearby location.
