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4. It is said that the petitioners being the manufacturers of the soft drinks in the process of finalising they have agreed to accept the buying of essence from Parle (Exports) Pvt. Ltd., on certain conditions. The conditions are set out which need not be narrated here. It is undisputed that the conditions related to the movement of the sale of articles in assigned areas. The other condition imposed is restriction of selling of essence which is purchased. The further condition is that they are permitted to use the trade mark in the name of the product and for that purpose they have to conform certain formula and a further condition is also there in regard to the quality standards which are prescribed by the Parle (Exports) Pvt. Ltd.

5. It is the case of the petitioners that they are buyers of these essences and they use these essences and utilise the same while manufacturing their own product. Their product is produced from their own factory. Their investment is independent. There is no financial obligation imposed on the Parle (Exports) at all and they have independent import release order as actual user of their products. They are paying independent taxes for their products according to the enactments which impose several taxes on certain goods covered by those enactments. The petitioners further case is that except the quality control which they are to ensure under agreement and the essence which is purchased from Parle (Exports) as outright trade transactions and the Parle (Exports) has absolutely no control either in the finance or supervision or lobour employed by the petitioners. The petitioners say that the company is at liberty to have its own customers, employees and the entire property in goods which is manufactured by the petitioners absolutely and solely belongs to them. The petitioners say that they are entitled to the profits as well as losses.

9. We have heard the learned counsel for the petitioners. The learned counsel for the petitioners contended before us that the franchise agreement does involve any financial liability or obligation on the Parle (Exports) Pvt. Ltd. It was contended that this agreement only permits the company to use the trade mark under certain conditions. It also imposes a condition in regard to the quality of goods. But, the Parle (Exports) Pvt. Ltd. company has no control or any say in the matter of manufacture of the product made by the petitioner-company. The management, supervision and the finances are totally controlled independently by the petitioner-company. The petitioner-company cannot be said to be agents. They are not servants of the Parle (Exports) Pvt. Ltd. They cannot be said to be employees. They are not also partners. The agreement is of a specific nature giving right to the petitioner-company to sell the product through using the essence produced by the Parle (Exports) Pvt. Ltd. The product is quite new one, once the essence is mixed. It was further contended by the learned counsel that the transaction embodied in the agreement is out and out sale. It cannot be said that the petitioner-company is an agent or a just an extended arm of the Parle (Exports) Pvt. Ltd., to manufacture the product in question.

12. We are afraid that this contention is not well founded. It the petitioner-company has got independent finances and the product is produced by it independently though with the help of the Parle (Exports) Pvt. Ltd., in the absence of any managerial or financial control or liability taken by Parle (Exports) we do not think that the product which is manufactured by the petitioner-company can form part of the products of the Parle (Exports) Pvt. Ltd. It is impossible to treat the petitioner-company as an agent or even in other capacity as the manager for the product for the manufacture or sale of the product of the Parle (Exports) Pvt. Ltd. In the absence of a specific relationship it is difficult to say that the Parle (Exports) Pvt. Ltd. is in any way concerned with the profit or loss of the petitioner-company. The transaction embodied in the franchise agreement is out and out sale. It is impossible to conceive that Parle (Exports) Pvt. Ltd., will have any link after the sale of the essence, in the subsequent processing of the product by the petitioner-company.