Delhi District Court
M/S Avenir Foods (P) Ltd vs M/S P.V.R. Limited on 14 November, 2022
IN THE COURT OF SH. GAURAV RAO, ADJ-03, NEW DELHI
DISTRICT, PATIALA HOUSE COURTS, NEW DELHI.
CS No. 712/17
CNR No. DLND01-006381-2017
M/s Avenir Foods (P) Ltd, No. 34/44 (38/216)
N.H Bye-pass Road, Edappally,
near Edappally Bye-pass Junction,
Ernakulam, Kochi- 682024
Kerala State
Represented by its Authorized Representative
Mr. Mahesh M.
........Plaintiff
Vs.
1. M/s P.V.R. Limited
No. 61, Basant Lok, Vasant Vihar,
New Delhi - 110057
Rep. By its Managing Director Sh. Ajay Bijli
2. Vipul Sreevasthava
Manager - F&B
PVR Limited, No. 61, Basant Lok,
Vasant Vihar,
New Delhi 110057
3. Rahul Singh
Authorized Representative
PVR Limited, No. 61, Basant Lok,
Vasant Vihar,
New Delhi 110057
4. Majoj Yadav
PVR Limited, No. 61, Basant Lok,
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 1/34
Vasant Vihar,
New Delhi 110057. ..........Defendant
Date of institution : 12.05.2017
Date on which reserved for judgment : 14.11.2022
Date of decision : 14.11.2022
Decision : Dismissed
JUDGMENT
1. The present suit has been filed by the plaintiff against the defendants for damages to the tune of Rs. 50,00,000/-.
Plaint/Plaintiff's version
2. It is the case of the plaintiff that it is a private limited company incorporated under the provisions of the Companies Act 1956 having its registered office at Kerala, Mr. Mahesh M. is its authorized representative who is fully conversant with the facts of the present case and is duly authorized vide board resolution dated 13.03.2017 to sign, verify and institute the present suit on behalf of the plaintiff.
2.1 It is further the plaintiff's case that it is engaged in the retail business of food & beverages especially business of French fries, smiley, pop corn chicken products etc. and is authorized CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 2/34 franchisee of M/s Mondial Foods Pvt. Ltd to open and operate retail outlets for their branded product namely French Chicken Popos. It is further its case that M/s Mondial Foods Pvt. Ltd is the authorized agent of French Chicken Popos a product owned by M/s French Fried Chicken Restaurant LLC.
2.2 It is further the plaintiff's case that defendant no. 1 is a company engaged in the business of inter alia developing, operating & managing multiplex/cinemas theaters, food courts, production of cinematograph films, marketing and distribution of films for the purpose of providing entertainment to the public at large and defendant no. 2 to 4 are the authorized officials/representatives of defendant no. 1 company.
2.3 It is further the plaintiff's case that during 2014 plaintiff and defendant no. 1 company discussed a business deal to allow the plaintiff to run kiosks in the food courts of all the multiplex theaters throughout India run by defendant no. 1 and pursuant to the said discussions, defendant no. 1 to 4 collectively promised the plaintiff that in the first phase they would grant permission to the plaintiff to run 10 kiosks in the theaters in Hyderabad, Chennai and Kochi and later on in all other theaters of defendant no. 1 in other parts of the country.
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 3/34 2.4 It is further the plaintiff's case that defendant no. 2 & 3, representing defendant no. 1, being its authorized representatives entered into an agreement dated 01.10.2014 with the plaintiff whereby the defendants agreed to grant license to the plaintiff to run kiosks for sale of Chicken Popos (Large & Regular), Fries (Large & Regular), Smiley (large & Regular), salad, wraps, rice initially at the theaters of defendant no. 1 at PVR Hyderabad Central Mall, PVR Hyderabad Benjaar Hills, PVR Hyderabad Inorbit Mall, PVR Hyderabad Forum Sujana Mall, PCR (Cinemax Cochin) Oberon Mall and PVR Cochin, Lulu Mall on the various terms & conditions stipulated in the said agreement initially for a period of one year from the date of execution. It is further the plaintiff's case that defendants had promised to extend the said facility to the plaintiff in other theaters in other states owned and managed by the defendant company from the second and third quarters of the said period.
2.5 It is further the plaintiff's case that the material understanding between the parties are stated in clause 2 of agreement dated 01.10.2014, clause 4 contains the payment terms and clause 5 described the obligations of the plaintiff company.
2.6 It is further the plaintiff's case that in compliance of the terms of the agreement dated 01.10.2014, plaintiff company complied with all its obligations, duly adhered to the terms of the agreement CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 4/34 and had taken the requisite permissions from VAT and Central Sales Tax registration for commencing two kiosks in Kerala immediately after execution of the agreement and those were functioning profitably and to the satisfaction of both the parties. It is the plaintiff's case that the permission and registration for the Hyderabad region was a time consuming process, about which, the defendants were also aware and as requested by the plaintiff, defendants allowed three months time and promised that immediately on getting these registrations, the plaintiff would be permitted to open the kiosks.
2.7 It is further the plaintiff's case that it had obtained the VAT registration and Central Sales Tax Registration from the Commercial Tax Department of both Telengana and Andhra Pradesh states and furnished copies of the same along with PAN details, FSSA certificate, corporation license, details of company certification etc. to the defendants within the agreed period of three months because of the earnest efforts put by the plaintiff.
2.8 It is further the plaintiff's case that it procured all the equipments required for running the retail outlets for the Hyderabad area in compliance of the terms of the agreement, each & every kiosk separately and had invested more than Rs 1 crore on that account alone and those equipments which were procured for Hyderabad project are not suitable for any other purpose and cannot be installed CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 5/34 at any other location.
2.9 It is further the plaintiff's case that it also recruited the required personnels, both technical & administrative, specifically for the purpose of running the retail outlets at the cinema theaters of the defendants and also procured accommodation facilities for them in various places, according to the location of the theaters. It is further the plaintiff's case that for the purpose of giving training to those personnels, plaintiff had incurred another amount of Rs. 50 lacs and it was ready in all respects for opening & operating the outlets as per the agreement.
2.10 It is the plaintiff's case that plaintiff had invested huge amounts for procuring the aforesaid licenses/permissions and also for procuring the equipments & other infrastructure for running the outlets, solely relying on the assurances given by the defendants that they shall permit the plaintiff to run kiosks in ten theaters initially and later on in other theaters of defendant no. 1 company throughout India.
2.11 It is further the plaintiff's case that despite the aforesaid legitimate efforts and investments made by the plaintiff, defendants permitted running of only one kiosk in Hyderabad and two kiosks in Kerala and plaintiff has been paying 45% of the profit regularly to the CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 6/34 defendants in terms of the agreement dated 01.10.2014.
2.12 It is further the plaintiff's case that inspite of repeated requests made by the plaintiff to the defendants personally as well as over telephone and email, the defendants have not cared to grant permit to the plaintiff to run the kiosks even in the theaters covered by agreement stating one or other flimsy reasons.
2.13 It is further the plaintiff's case that since the response from the defendants was not hopeful, its official including legal officer & Chief Operating Officer met defendant no. 2 and 3 in their office in New Delhi on 02.02.2015 and after discussions, the defendants reiterated their assurances that the plaintiff would be granted permission to run the other kiosks immediately in terms of the agreement. It is the plaintiff's case that relying upon the assurances of the defendants, the plaintiff continued to invest amounts by paying salary of the staff members recruited for the said purpose as well as towards rent for accommodation of those staff members and for keeping the equipments.
2.14 It is the plaintiff's case that subsequently defendant no. 3 met the Chief Executive Officer of the plaintiff at UAE on 05.02.2015 and demanded heavy amounts as bribe for revoking the termination and also for granting license for kiosks in their other theaters and also CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 7/34 threatened the plaintiff that the license to the existing kiosks will also be cancelled if his demand is not acceded to.
2.15 It is further the plaintiff's case that to the utter dismay & shock of the plaintiff, it received a notice dated 20.04.2015 from defendant no. 1 unilaterally terminating the license granted in respect of the kiosk at PVR Sujana Mall, Hyderabad w.e.f. 25.05.2015 and same was against the termination clause stipulated in clause 7.2 of the agreement dated 01.10.2014 and in the said termination letter defendant no. 1 has not specified any reason for such termination. It is further the plaintiff's case that unexpected termination of the agreement caused heavy financial loss to the plaintiff to the tune of more than Rs. 1.5 crore.
2.16 It is further the plaintiff's case that plaintiff issued legal notice dated 24.06.2015 to the defendants through its lawyer in which it was specifically stated that the defendants have no legal or moral right to unilaterally terminate the agreement which amounts to breach of trust & cheating, however, even after receipt of said notice, defendants neither responded nor complied with the demands of the notice.
2.17 Hence the present suit.
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 8/34 Written Statement of defendant no. 1/Defendant no. 1's version
3. It was pleaded that defendant is a company incorporated under the Companies Act, 1956, having its office at 61, Basant Lok, Vasant Vihar, New Delhi, is engaged in the business of building, managing, running, operating multiplex theaters, food courts, production of cinematograph films and marketing & distributing of films across the country for the purpose of providing entertainment to the public in cities across India, under various brands suffixed or prefixed with PVR such as PVR Premiere, PVR Cinemas, PVR Gold Class or any other brand name which may be introduced by the PVR subsequently.
3.1 It was further pleaded that case of the plaintiff is based on agreement dated 01.10.2014 which was for a period of one year subject to the termination clause as contained in the agreement itself and the said agreement was duly terminated by serving upon the plaintiff notice dated 20.04.2015 in terms of the termination clause citing adequate reasons for the same and hence being a purely contractual dispute no cause of action has so arisen in favour of the plaintiff to file the present suit.
3.2 It was pleaded that bare perusal of the agreement clearly shows that at no point of time the defendant had assured or promised CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 9/34 the plaintiff to initially start the business with 10 theaters in Hyderabad, Kochi and Chennai for a period of one year and then to extend the plaintiff's contract to any other theater belonging to or managed by the defendant.
3.3 It was pleaded that a bare perusal of the agreement, especially clause 4 & 5, would reveal that the same is the trading contract between the parties wherein the defendant had to purchase the material as mentioned in the agreement from the plaintiff and sell the same from the premises of the defendant and the infrastructure & manpower had to be made available by the plaintiff as its sole responsibility.
3.4 It was further pleaded that clause 5 of the agreement clearly brought on record the obligations on the part of the plaintiff to be performed, which it clearly failed to do so. It was further pleaded that plaintiff miserably failed to provide the infrastructure & manpower and it clearly failed to get the adequate registrations from Municipal authorities and to submit the same to the defendant before commencement of commercial operations. It was pleaded that the plaintiff failed to set up the required infrastructure & to deploy adequate manpower as per the agreement and also failed to procure licenses and necessary permissions from concerned authorities. It was further pleaded that since time was the essence of the contract and on CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 10/34 the failure of the plaintiff to undertake its obligations, the defendant was left with no other alternative but to terminate the aforesaid agreement vide letter dated 20.04.2015 thereby terminating all the relationship between the parties.
3.5 It was denied that the plaintiff complied with its obligations under the contract or was able to procure the licenses & permissions as provided under the contract and it was pleaded that therefore the plaintiff is stopped under the law to claim any damages arising out of its own failures. It was pleaded that in fact it is the defendant who had suffered immensely under the hands of the plaintiff, due to the lapses on the part of the plaintiff and it is the defendant who is entitled to damages rather than the plaintiff.
3.6 It was denied that plaintiff invested huge amounts in procuring any licenses whatsoever or any of the kiosks of the plaintiff were ever operational producing any profit whatsoever and it was further denied that any payment of profit was ever paid to the defendant, rather it was pleaded that it is on account of the lapses committed by the plaintiff that the business of the defendant suffered immensely and the defendant had to hire third parties to meet its requirement leading to exemplary losses.
3.7 It was denied that any meeting took place between the CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 11/34 plaintiff and the employees of defendant to discuss the grant of permission to run further kiosks and it was stated that the said meeting is beyond the scope of the agreement itself as under clause 2.5 it is the plaintiff who has clearly agreed that the agreement in question is limited to the properties and premises as mentioned in the agreement only and do not extend to other PVR premises/cinemas, food courts, bowling alley etc. It was pleaded that allegations upon the officials and employees of the defendant company qua demand of bribe is highly derogatory and specifically denied.
3.8 It was further pleaded that termination of the agreement dated 01.10.2014 by virtue of notice dated 20.04.2015 was done as per the contract and upon the failure of the plaintiff to comply with its obligations under the contract.
3.9 It was denied that a sum of Rs. 50 lacs is liable to be paid by the defendant to the plaintiff towards the damages and it was pleaded that a bare perusal of the plaint shows that the damages have not been quantified, have no basis whatsoever and plaintiff has failed to explain as to how it suffered the damages/losses.
Written statement of defendant no. 2 to 4.
4. No WS was filed on behalf of defendant no. 2 to 4, despite CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 12/34 lapse of the statutory period and accordingly their right to file the WS was closed by the Ld. Predecessor of this court vide orders dated 19.09.2017.
Replication
5. In the replication, the plaintiff denied the averments of the written statement while simultaneously reiterating and reaffirming the contents of the plaint.
Issues
6. On the basis of pleadings of the parties, following issues were framed, by the Ld. Predecessor of this court, vide proceedings dated 06.08.2018:-
1. Whether plaintiff is entitled to recovery of Rs. 50 lacs along with interest @ 18% per annum? OPP
2. Relief.
Plaintiff's evidence
7. To prove its case, plaintiff examined Sh. K.A. Sharafudheen as PW1 who tendered his evidence by way of affidavit Ex. PW1/A and relied upon the following documents:-
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 13/34 A. Letter of authorization as Ex. PW1/1.
B. Board of Resolution dated 13.03.2017 as Ex. PW1/2. C. Certificate of incorporation dated 10.02.2014 as Ex. PW1/3. D. Certificate of registration dated 04.10.2014 as Ex. PW1/4.
E. Agreement dated 01.10.2014 as Ex. PW1/5. F. Certificate of registration dated 06.11.2014 as Ex. PW1/6. G. VAT Registration certificate as Ex. PW1/7. H. Application for license/renewal of license under Safety and
Standards Act 2006 dated 25.11.2014 as Ex. PW1/8.
I. Receipt dated 25.11.2014 as Ex. PW1/9.
J. Post registration visit intimation dated 01.12.2014 as Ex.
PW1/10.
K. Copy of the invoices/documents as Ex. PW1/11.
L. Correspondences between the plaintiff and defendant as Ex.
PW1/12.
M. Letter dated 20.04.2015 issued by the defendant as Ex.
PW1/13.
N. Legal notice dated 24.06.2015 as Ex. PW1/14.
O. Plaintiff also placed on record license dated 31.12.2014 as Ex.
PW1/15.
Defendant's evidence
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 14/34
8. Defendant examined Sh. Prahlad Singh as DW1 and he tendered his evidence by way of affidavit Ex. DW1/A and relied upon following documents:-
A. Board resolution dated 30.05.2017 as Ex. DW1/1.
B. Agreement dated 01.10.2014 as Ex. DW1/2. C. Letter dated 20.04.2015 as Ex. DW1/3. Findings
9. I have heard the Ld. counsels for the parties, given due consideration to the rival contentions raised at bar, considered the written synopsis & case laws relied upon by the parties and have carefully gone through the record. My finding is as under:-
Issue no. 1 :- Whether plaintiff is entitled to recovery of Rs. 50 lacs along with interest @ 18% per annum? OPP 9.1 In nutshell the case of the plaintiff company is that it had entered into agreement Ex. PW1/5, on 01.10.2014, with the defendants whereby the plaintiff company was granted license to run kiosks for sale of chicken popos, fries, smilies etc. initially at the theaters of defendant no. 1 at Hyderabad and Cochin for a period of one year with further assurance that the said facility would be extended to other theaters owned, managed by the defendant CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 15/34 company. However, though the plaintiff company complied with all the terms and conditions of the said agreement, obtained necessary permissions, set up the requisite infrastructure, recruited the required staff/personnels, the defendant vide its letter dated 20.04.2015 i.e. Ex.
PW1/13 unilaterally terminated the said license w.e.f 20.05.2015 which termination was not only in violation of agreement Ex. PW1/5 but it also resulted into huge loss to the plaintiff company to the tune of Rs. 50 lacs.
9.2 However, in my considered opinion the plaintiff company is not entitled to any damages as have been claimed/prayed for.
9.3 In support of its case plaintiff had examined only one witness i.e. Sh. K.A. Sharafudheen as PW1. However there are serious doubts as regards the authority of PW1 to depose on behalf of the plaintiff company. It is to be seen that the plaintiff is a company, a corporation and to have a valid authority on behalf of the plaintiff company so as to depose on its behalf, PW1 and for that matter plaintiff company should have proved the board resolution whereby PW1 was authorized to depose on behalf of the plaintiff. However no such board resolution and in fact not even minutes of meeting of the board were proved on record by the plaintiff. PW1 only placed on record one authorization letter issued by Managing Director of the plaintiff company i.e. PW1/1. The relevant portion of the testimony of CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 16/34 PW1 in this regard reads as under:-
"Q. Can you produce Board Resolution authorizing you to depose before the Court?
A. Photocopy of Board Resolution is Ex. PW1/1. (Objected on the ground that the document is not a Board Resolution and is merely an authorisation). Objection kept open.
I don't remember if any Board Resolution was passed in my favour. I have not brought any minutes of any meeting of the Board"
9.4 Though PW1 also claimed that he is a resident director of the plaintiff company, however no document whatsoever was placed on record to corroborate the said claim and the said averment remained bald and unsubstantiated. The relevant portion of the testimony of PW1 in this regard reads as under:-
"It is wrong to suggest that I am not authorized to depose as witness. Vol. I am a resident director. I joined the Plaintiff company as resident director on 16.10.14. By resident director, I mean the director residing in India. Vol. Two directors of the company are residing abroad."
9.5 In fact the plaintiff company had instituted the present suit through one Mr. Mahesh, however, no resolution, minutes of the meeting of the board was proved on record and only copy of one authorization in his favour was proved as Ex. PW1/2. Ex. PW1/2 though mentioned as board resolution dated 13.03.2017, however, it is not any board resolution or minutes of meeting but only an authorization by the Director. Even the original of the same i.e. the authority and in fact as is the case in respect of all other documents, was never brought on record despite the objection taken by the CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 17/34 defendant company. It was incumbent upon the plaintiff to bring on record the board of resolution, the minutes of meeting of the board to prove proper authorization in favour of Mr. Mahesh to institute the present suit against the defendant. The law is well settled that company do the work as per resolutions and any person acting on behalf of company has to be duly authorized. In Havells India Ltd vs Dilip Rathi RFA no. 10/2017 & CM APPL.245/2017 dated 16.02.2018 it has been held as under:-
"It has been held by Delhi High Court in "Escorts Ltd. Vs. Sai Autos and Ors," 42(1990) DLT 446 that only way to prove that a particular resolution at a meeting of Board of Directors of Company is that the minutes book in which said Resolution was recorded as having been so passed, should be produced in the court as that can form evidence of the fact that such a Resolution was passed. In that judgment Hon'ble High Court while referring to the provisions of Section 194 of Companies Act and also relying upon earlier judgment has held that Resolution of Board of Directors can be proved only by bringing minutes book of the Board of Directors Meeting. In the present case, such procedure has not been adopted.
21. In the evidence of PW-1, two Resolutions Ex.PW1/2 and Ex.PW1/2A have been simply referred to without proof of their base by bringing the minutes book. Moreover, these extract of Resolution do not bear signatures of any of the directors of the plaintiff company. Ld. Counsel for the defendant has relied upon judgment of Delhi High Court in M/s Nibro Ltd. Vs. National Insurance Co. Ltd. decided on 06.03.1990, judgment in M/s, Anant Raj Agency Pvt. Ltd. vs. M/s. National Insurance Co. decided on 14.05.2009 in CS OS No. 1413/90. In both these judgments also Hon'ble High Court had taken the view that due signing and verification of plaint is distinct from institution. Order 29 CPC does not cover the institution of the suit. A suit on behalf of corporation is required to be proved to have been validly instituted. Such valid institution can only be under the authority of the company. Such authority can flow only from Board of Directors of the Company. Thus, it is to be establish that suit has been instituted under the authority of Board of Directors of the CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 18/34 company or under the authority of some person duly empowered by the Board of Directors of the company to institute suit and legal proceedings for claims of company. Thus Order 29 Rule 1 CPC does not authorize persons mention therein to institute the suit on behalf of the corporation. Authority to institute the suit must be proved lawfully by primary evidence of Resolution of Board of Directors of Company, passed in this regard"
9.6 In Baker Oil Tools (India) Pvt. Ltd. Vs. Baker Hughes Ltd. & Anr RFA no. 583/2004 dated 03.06.2011, Hon'ble High Court of Delhi held as under:-
"29. It is well-settled that under section 291 of the Companies Act except where express provision is made that the powers of a company in respect of a particular matter are to be exercised by the company in general meeting, in all other cases the board of directors are entitled to exercise all its powers. Individual directors have such powers only as are vested in them by the memorandum and articles. It is true that ordinarily the court will not unsuit a person on account of technicalities. However, the question of authority to institute a suit on behalf of a company is not a technical matter. It has far-reaching effects. It often affects the policy and finances of the company. Thus , unless a power to institute a suit is specifically conferred on a particular director, he has no authority to institute a suit on behalf of the company. Needless to say such a power can be conferred by the board of directors only by passing a resolution in that regard.....
30. The plaintiff has not placed on record any resolution passed by the company authorising Shri G. Jhajharia to institute the suit. Shri G. Jhajharia did not come forward to make a statement that he was in a position to depose to the facts of the case. In the plaint signed by him, he claims to be a principal officer and director, but there is no evidence on record to indicate that he had the authority to institute the suit. The memorandum and articles of association of the plaintiff company are also not placed on record. Even after the suit was instituted by Shri G. Jhajharia, no resolution was passed by the company ratifying this action. No such decision of the board of directors is placed on record in the present case. The plaintiff has examined Shri Ashok Kumar Jhajharia. He has placed on record, exhibit PW-2/1, which is the resolution of the board of directors CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 19/34 reappointing Shri G. Jhajharia as the director but this resolution does not empower Shri G. Jhajharia as a director to institute the present suit. Shri Ashok Kumar Jhajharia has stated that he was handling the day-to-day management of the plaintiff company including the insurance part of it. He, however, does not state that Mr. G. Jhajharia was handling the day-to-day management or was in charge of the insurance claim."
9.7 Reliance may be placed upon the law laid down in M/s Nibro Limited v. National Insurance Company Limited AIR 1991 Delhi 25, Shubh Shanti Services Limited Vs. Manjula S. Agarwalla and others (2005) 5 SCC 30, Punjab Small Industries and Export Corporation Ltd.Vs. Gurinder Singh and another CRM-A-1548- MA-2015 (O&M) dated 12.02.2020 and Bombay High Court in Balaji Agencies Pvt. Ltd. Goa Vs. M/s. Samudra Ropes Pvt.Ltd, 2011 (4) Criminal Court Cases 495.
9.8 Hence neither the suit was properly instituted nor the witness's/PW1's authority to depose on behalf of the plaintiff stands proved. Coming back to the facts of the present case, it is the plaintiff's case that the agreement Ex. PW1/5 (also Ex. DW1/2) was entered on 01.10.2014 and it was valid for one year with a renewable clause. I have considered the said agreement. As per the said agreement, understanding between the parties, it was for the plaintiff to supply the products to the defendant company as per the purchase orders placed by it and it was for the defendant company to sell the products from its premises. Same is crystal clear from clause 2.1 and clause 4 of the agreement. The agreement also casted obligations CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 20/34 upon the plaintiff company as are provided in clause 5 of the agreement which provides for "Obligations of AFPL". Clause 5.1, 5.4 and 5.8 casted the following obligations upon AFPL/plaintiff company. Same are reproduced hereunder:-
"5.1) Get itself registered under FSSAI/municipal corporation or any other concerned authority and shall supply a copy of the same to PVR before commencement of commercial operations from Kiosk. 5.4) Take all the approval/permission/NOC from concerned authorities for running activities from Kiosk. 5.8) Comply all the rules regulation of the Mall authority as time to time communicated by PVR"
9.9 However, it stands proved on record that the plaintiff company failed to procure the necessary permissions, licenses to run the business in terms of agreement Ex. PW1/5. Not only licenses/permissions were not so obtained but even their copies were not supplied to the defendant company and as against the categoric stipulation in the agreement (clause 5.1) that the copies of the same were to be supplied to the defendant company, PW1 denied the suggestion that the plaintiff was not so required to do so. The relevant portion of cross-examination of PW1 is reproduced hereunder in this regard:-
"On the date of agreement i.e, 01.10.2014, Plaintiff was not in possession of any license to do the business. We got the business registered under FSSAI. In Hyderabad the said registration was on 31.12.14 and in Cochin, it was on 04.10.2014. We got municipal license one day prior to registration under FSSAI in Hyderabad.
It is wrong to suggest that the license under FSSAI was required to be in possession on the date of Agreement...........It is wrong to suggest that the plaintiff was required to supply copies of all licenses/permissions from the concerned authorities to the CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 21/34 defendant before commencement of commercial operation.............I have in my possession the said license and can file the same if directed by the court. (with the consent of the counsels for the parties, the document is taken on record and exhibited as Ex. PW-1/15. The said license is dated 31.12.2014. Trade license was obtained but not filed. It is wrong to suggest that the plaintiff never got the trade license. Vol. We obtained all the required licenses. I don't remember the date when I sent the copies of the licenses etc.. to the defendant. Vol. Copies of all such licenses were however sent to the defendant.......We got clearance from Mall authorities, but the same has not been filed. VAT registration as per Ex. PW-1/6 was obtained on 06.11.2014"
9.10 Hence on the day when the agreement was entered into between the plaintiff and the defendant, the plaintiff company was not having the requisite license or permission to do the business. No doubt the same were not required on the date of agreement but the same were definitely required before commencement of commercial operations in terms of clause 5.1 and 5.4 of agreement Ex. PW1/5. As discussed above not only PW1 denied that the copy was to be supplied to the defendant company, which is in contravention of stipulation in agreement Ex. PW1/5 but the plaintiff has failed to prove that the copies were indeed supplied to the defendant. Apart from the bald submissions as above, plaintiff failed to prove as to when the copies were so supplied/sent to the defendant. No date, month or year or the mode through the copies were supplied was ever proved by the plaintiff. Though PW1 relied upon certain correspondences/emails i.e. Ex. PW1/12 but these correspondences were not proved as per the rules of evidence. Defendant had taken CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 22/34 objection to the exhibit of these documents as they were not produced in original. The emails were not written by or exchanged with PW1. There is no certificate regarding these emails. Even otherwise these emails only claim of sending the certificate of registration, FSSAI acknowledgment, VAT registration etc. but there is no attachment in these emails. In fact PW1 did not bother to explain these correspondences, their import and how these correspondences have a bearing on the termination of the agreement and who are the parties, who are the concerned persons corresponding on behalf of the plaintiff and the defendant as some of the emails have been sent by one Vipul Srivastava, another by Dr. M.A. Babu, Arun William etc. Furthermore even the clearance of Mall authorities, as was mandated by clause 5.4, was claimed to have been obtained but no such clearance/permission has been placed on record by the plaintiff, so as to prove that it had indeed obtained the said clearance/permission.
9.11 It also stands proved on record that in clear breach of the terms and conditions of the agreement the plaintiff company started the commercial operations in October 2014, whereas, as per the plaintiff's own case it had got the business registered with FSSAI, obtained the license i.e Ex. PW1/15 in terms of clause 5.1 of the agreement only on 31.12.2014. Though PW1 claimed that it was merely a "soft opening" but there is nothing like a soft opening in a commercial operation/business. Once goods are sold, business is CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 23/34 transacted, the commercial operations start irrespective of the quantum of sale etc. The fact that PW1 claimed that it was a "trial run" sufficiently proves that the business/commercial operations had commenced and thus there was a clear breach of clause 5.1 of agreement Ex. PW1/5. The relevant portion of cross-examination of PW1 in this regard is reproduced hereunder:-
"Q. 9 I put it to you that commercial operations at Hyderabad were started by you in the first week of October, 2014? Ans, What started in the first week of October, 2014 was a soft opening and a trial run and was done only in one outlet called Kukatpally Sujana Mall.
Q. 10. I put it to you that the aforesaid outlet was fully operational and was not opened only for a soft opening or a trial run?
Ans. It is incorrect.
Q. 11 I put it to you that the aforesaid outlet at Hyderabad Mall was made fully functional without obtaining the necessary licenses?
Ans. It is incorrect."
9.12 Plaintiff had applied for issuance of license under FSSAI, for running the business, with the Director & Commissioner of Food Safety, Government of Telangana, only on 25.11.2014 as is evident from Ex. PW1/8 to Ex. PW1/10. The plaintiff was registered with the Commercial Tax Department, Government of Telangana only w.e.f. 01.11.2014 as is the plaintiff's own case vide Ex. PW1/6 whereas it had began the operations in October 2014 itself. Similarly the VAT TIN/registration was done only on 01.11.2014 vide Ex. PW1/7. Though PW1 claimed that the commercial operations were started only in January 2015, however, except for the bald averment no CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 24/34 material was proved on record to substantiate the said claim in the form of sale invoices, statement of account, purchase orders etc. The relevant portion of cross-examination of PW1 in this regard read as under:-
"Q. 7 Please specify the date on which you commenced the commercial operations from the kiosk in Hyderabad? Ans. It is started in January, 2015.
Q. 8 Can you produce any document to show that commercial operations started in January, 2015?
Ans. I cannot file any fresh document except the documents on record."
9.13 The termination clause is contained in clause 7 of agreement Ex. PW1/5. Clause 7.2 provides as under:-
"7.2) PVR can terminate the present Agreement in the following circumstances:
a)xxxx
b) In case of breach of any terms and condition of present agreement by AFPL. In such an event PVR shall give a 1 Months notice to AFPL to cure such a default and in the event AFPL does not cure the same PVR can terminate the same with 30 days advance Notice."
9.14 As discussed above the date of the agreement is 01.10.2014 and the term of the agreement as per clause 3 of Ex. PW1/5 was one year. Also as discussed above the plaintiff company did not have the requisite licenses/permissions as on 01.10.2014 and the license/registration took place post the agreement and most importantly before commencement of commercial operations. PW1 had claimed in para 7 of his affidavit as under:-
"........However, as the Defendants are also aware getting the CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 25/34 permissions and registrations for the Hyderabad region was a time consuming process and as requested by the Plaintiff company, the Defendants have allowed three months time and promised that immediately on getting these registrations, the Plaintiff would be permitted to open the kiosks."
9.15 However PW1 failed to prove that when the plaintiff had sought 3 months time from the defendant company and when the same was granted to it. In fact the said statement is self contradictory because, as discussed above, before obtaining the permissions and before the lapse of the alleged three months period, the plaintiff company had already commenced the business at Hyderabad. The relevant portion of the cross-examination of PW1 in this regard is reproduced hereunder:-
"There is no document in black and white to the effect that the defendant had granted 3 months time period to us to apply for necessary licenses/ permissions"
9.16 Hence the plaintiff had indeed committed breach of the terms and conditions of agreement Ex. PW1/5. The agreement was terminated vide notice dated 20.04.2015 i.e. Ex. PW1/13 (also Ex. DW1/3). One months time was given to the plaintiff company and the termination was effective from 25.05.2015. In the said termination notice it was mentioned that the termination was as per clause 7.2 of the agreement. Clause 7.2 has other clauses apart from clause (b), which has been discussed above, i.e. clause (a) (c) and (i) as regards grounds for termination of agreement, which are reproduced hereunder:-
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 26/34 "a) By mutual understanding by giving 3 months notice to each other
c) By giving 3 months notice to AFPL.
i) Force majeure."
9.17 The termination was obviously not under sub clause (a),
(c) or (i) and it appears that the termination was under sub clause (b) of clause 7.2. In fact DW1 during his cross-examination stated as "Termination of the agreement took place under clause 7.2 (b) of the contract". However, the plaintiff company was not given a months notice to cure the defect, default or rectify the breach of the terms and conditions so committed. It was only if the plaintiff company had failed to cure the same, that the defendant company could have terminated the agreement with 30 days advance notice. Defendant company has not placed on record any notice which it had issued to the plaintiff company for rectifying the breaches/defaults which could justify termination of agreement Ex. PW1/5. DW1 during his cross-
examination in this regard stated as under:-
"I do not know if notice calling upon the plaintiff to rectify the defects before termination of the agreement was ever given".
9.18 However the breaches were well within the knowledge of the plaintiff company and therefore plaintiff company cannot cry foul. It cannot be permitted to take advantage of its own wrongs, even if the termination was bad, not in consonance with Ex. PW1/5. At the same time it will be worthwhile to highlight the cross-examination of DW1 wherein DW1 claimed that all the breaches were informed to CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 27/34 the plaintiff and that he can produce the relevant correspondences in this regard but despite the said statement, the plaintiff did not call upon DW1 to produce those relevant correspondences for reasons best known to the plaintiff. The relevant portion of the cross- examination of DW1 in this regard is reproduced hereunder:-
"Defendant had informed the plaintiff of all the default/lapses committed by him leading to termination of the agreement. Vol. Plaintiff was also informed that he was not taking precautions relating to hygiene, besides failing to provide requisite machinery and manpower. I can make efforts to lay my hands on the documents/correspondences relating to lapses/default on the part of the plaintiff. I require two weeks' time for this purpose."
9.19 Things would have been different had DW1 been called upon to produce those correspondences but the same were not produced. When the plaintiff did not seek those documents, did not seek to create doubts upon the claim/veracity of DW1, it rendered defendant's case more probable as against the plaintiff's regarding the termination being in consonance with clause 7.2 (b).
9.20 Most importantly, even if the termination was bad and not in accordance with agreement Ex. PW1/5, plaintiff has failed to prove that it suffered any losses on account of the termination. It was for the plaintiff to prove the actual loss/damages so as to be entitled to seek compensation for those losses/damages, however, the plaintiff miserably failed to prove that it had suffered any loss/damage.
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 28/34 9.21 The manner in which the present suit has been prosecuted by the plaintiff is writ large from the record. Plaintiff/PW1 did not bother to prove the documents as relied during the testimony of PW1 as per the rules of evidence. The original of the documents were never produced on record and to add on to that, the answers given by PW1 during his cross-examination speaks volume about the manner in which the present litigation has been pursued by the plaintiff/PW1. The relevant portion of the cross-examination of PW1 is reproduced hereunder:-
"Q. 12 Please see your affidavit by way of evidence and more show paragraph No. 9 in which you have stated that the plaintiff company has invested more than one crore rupees for procuring all the equipment for running the retail outlets for Hyderabad area. Can you show any document, bifurcation or breakup qua the same? Ans. I cannot file any document relating separately to Hyderabad area which comprises of Hyderabad, Cochin and Chennai. Q. 13 Please tell me the basis on which you have arrived at this figure of Rs. 1,00,00,000/-?
Ans. There is no basis.
Q. 14 Please see paragraph 10 of your deposition. Can you produce any list of personnel, both technical and administrative employed by you for running the retail outlets?
Ans. No. Q. 15 Can you produce any document to show that the plaintiff hired accommodation facilities for the above personnel? Ans. No. Q. 16 I put it to you that the plaintiff miserably failed to recruit the manpower both technical and administrative as per the contract and thus the contract was a non starter.
Ans. It is incorrect.
Q. 17 Can you produce any document to show that the plaintiff had provided training to the aforesaid personnel? Ans. No. Q. 18 Can you produce any document to arrive at a figure of RS. 50 lakhs so incurred for giving training to the above personnel? Ans. No. CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 29/34 Q. 20. (Please see paragraph No. 17 of your affidavit) And please tell me the basis on which you have arrived at this figure of Rs. 1.5 crores.
Ans. Assessment was made and shown as per bills and vouchers. It is wrong suggest that the above said figure of Rs. 1.5 crores has no basis. It is wrong suggest that the plaintiff company did not incur any loss (please see paragraph No. 22 of your affidavit) Q. 21 Can you tell me the basis on which you have stated that the plaintiff is entitled to an amount of Rs. 1.86 crores? Ans. There is no complete proof.
Q. 22 I put it to you that there is no proof or basis on which you have arrived at the aforesaid amount of Rs. 1.86 crores? Ans. Proof or the basis whatever has already been filed. Q. 23 Can you tell me the basis on which you have claimed an amount of Rs. 50 lakhs.
Ans. There is no basis. Vol. we have limited our claim Rs. 50 lakhs. Q. 24 I put it to you that there is no basis of any of your claims and nothing is due and payable.
Ans. It is incorrect."
9.22 Hence the plaintiff miserably failed to prove that it had suffered any loss on account of termination of the agreement/contract by the defendant. No details, bills, invoices of the equipments procured by the plaintiff for carrying on the business, in terms of the agreement was ever proved on record. No details of the employees, personnels, recruited for running/operating the business/kiosks was ever furnished or proved on record. No details of the expenses incurred for payment of their salary or for imparting training to them or for their accommodation etc. was ever proved on record. The averments made in the plaint, the claim made in the affidavit could not even be remotely substantiated. Though PW1 relied upon certain invoices, however, again these invoices are mere photocopies and the CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 30/34 original of the same was never proved. Furthermore plaintiff/PW1 has failed to explain the significance of these documents especially Annexure II and Annexure III which form part of Ex. PW1/11. These annexure contains details of products to be sold at the kiosks at the defendant's theaters and the equipments which the plaintiff has at its disposal. Remaining are quotations for example at page 35 & page 36 and invoices which otherwise admittedly do not have any connection with the agreement between the parties i.e. Ex. PW1/5 as was admitted by PW1 during his cross-examination. The relevant portion of his cross-examination is reproduced hereunder:-
"Q. How do you co-relate the document Ex. PW-1/11 with the agreement in question i.e. agreement 1.10.2014? Ans. The invoice shows the name of the plaintiff company i.e. Avenir Food Pvt. Ltd. as the purchaser of the equipment from our Hyderabad Office. It is correct that the document does not bear the name of the defendant or mention the agreement in question. Q. 4 Can you show any document connecting the purchases referred to by you with the contract in question?
Ans. Yes.
Q. 5. Please point out the document referred in the preceding question.
Ans. Quotations are relied upon by the plaintiff indicate the plaintiff's name but these do not show the name of defendant or any connection with the contract in question"
9.23 In Punjab State Civil Supplies Corp. Ltd vs Sikander Singh 2006 (3) SCC 736 it has been held as under:-
"A suit for damages for breach of contract under common law can be decreed only when the damages are found to have occurred by reason of such breaches on the part of the defendant. For the said purpose, the extent of damages suffered must be proved in terms of Section 73 of the Indian Contract Act"
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 31/34 9.24 Reliance may also be placed upon law laid down in Kanchan Udyog Limited Vs. United Spirits Limited 2017 (8) SCC 237, Kailash Nath Associates Vs. Delhi Development Authority 2015 (4) SCC 136 and Oil & Natural Gas corporation Ltd. Vs. Saw Pipes Ltd. 2003 (5) SCC 705. In Delhi Metro Rail Corporation Ltd. vs Sh. Satish Gujral 2015 (8) AD (Delhi) 485 it has been held as under:-
"23. No doubt, issue no.3 has been proved by the plaintiff in its favour to the extent that defendant is held guilty of breach of contract, however, damages can only be awarded if the damages are proved by the plaintiff, in accordance with law. Section 73 of the Indian Contract Act, 1872, which applies in the present case, requires the plaintiff to lead evidence as to how its cost had increased with respect to the work which was executed by it and that such an increase was on account of breach of contract by the defendant. However, plaintiff has led no credible evidence, whatsoever, except self serving statements and self serving oral statements cannot be taken as discharge of onus of proof of damages having been caused to the plaintiff.
9.25 Plaintiff had also claimed that defendant no. 1 had assured/ promised to extend the facility, in terms of agreement dated 01.10.2014 i.e. Ex. PW1/5, to the other theaters in the other parts of the country, however, there is no such understanding, term or clause in Ex. PW1/5 and in fact as per clause 2.5 read with clause 1.8 and Annexure 1 it becomes apparent that the said agreement was only in respect of six cinema complexes/outlets of defendant at Hyderabad and Cochin and was not to extend to other PVR CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 32/34 cinemas/premises/food courts etc. 9.26 Though certain allegations were leveled against the employees of the defendant company i.e. defendant no. 2 to 4, however, those allegations could not be even remotely substantiated by the plaintiff. The relevant portion of cross-examination of PW1 is reproduced hereunder:-
"I cannot file any document in support of my contention in para 14 of my affidavit that I met defendants No.. 2&3 on 02.02.2015. No minutes of the said meeting were drawn. Vol. It was a casual meeting. All assurances given by the defendants No. 2&3 were oral ones and nothing was put into black & white. It is denied that no meeting took place on 02.02.2015. (Please see para 15 of your affidavit) I cannot produce any document to show that defendant No. 3 met the chief executive officer of the plaintiff company at Dubai on 05.02.2015. Vol. It was not an official meeting. I cannot file any document/recording to show if any amount as bribe was demanded by defendant no. 3."
9.27 Neither the meeting dated 02.02.2015 could be proved nor the alleged demand of bribe on 05.02.2015 could be proved. The allegations appears to have been leveled merely to scandalize the matter/dispute and tarnish the image of the defendant's employees.
9.28 Therefore in view of above discussion, issue no. 1 is decided against the plaintiff.
Relief CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 33/34
10. As issue no. 1 has been decided against the plaintiff, plaintiff is not entitled to any relief. Suit of the plaintiff is liable to be dismissed. I order accordingly.
11. Decree sheet be prepared accordingly. File be consigned to record room after necessary compliance.
Announced in the open court (Gaurav Rao)
on 14th November 2022 ADJ-03/ New Delhi District,
Patiala House Courts, Delhi.
CS No. 712/17 M/s Avenir Foods Pvt Ltd. Vs. M/s PVR Ltd and ors 34/34