Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
st
Reserved on: 21 August, 2024
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Date of Decision: 19 November, 2024
+ CS(COMM) 386/2022
ADM CORPORATION .....Plaintiff
Through: Mr. Siddhartha Iyer, Advocate
versus
REDINGTON INDIA LTD & ANR. .....Defendants
Through: Mr. Abdhesh Chaudhary, Ms.
Geetanjali Setia, Ms. Manisha Suri
and Mr. Vinayak Mishra, Advocates
for D-1
Mr. Arjun Harkauli and Mr. Prateek
Garg, Advocates for D-2.
%
CORAM:
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
J U D G M E N T
MANMEET PRITAM SINGH ARORA, J:
I.A. 24807/2023 ( Application under Order I Rule 10 CPC on behalf of
Defendant No. 2 seeking deletion from array of parties)
1. This is an interlocutory application filed by Defendant No. 2, H.P
sales India Ltd under Order I Rule 10 of the Code of Civil Procedure, 1908
(‘CPC’) seeking its deletion from the array of parties on the ground that
there exists no contractual obligation between the Defendant No. 2 and
Plaintiff; and Plaintiff has failed to make out any cause of action to implead
Defendant No. 2 as a party in the present suit.
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
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CS(COMM) 386/2022 Page 1 of 11
2. The brief facts as set out in the plaint, which are relevant to adjudicate
on the application are as follows:-
2.1 Defendant No. 1, is an authorized pan India non-exclusive distributor
of high-end printing machines manufactured under the label of Defendant
No. 2.
2.2 Plaintiff and Defendant No. 1 entered into a Business Associate
Agreement dated 07.09.2009 for the sale of products of Defendant No. 2 in
lieu of the Overriding Commission (ORC) paid through Defendant No. 1.
The term of the agreement was for a period of one year.
2.3 After the expiry of the period agreed in the Business Associate
Agreement dated 07.09.2009, the commercial relationship between the
Plaintiff and Defendant No. 1 continued for almost 13 years, without any
formal written agreement. It is stated that the commercial terms and
conditions during this extended period were settled by Defendant No. 1 in its
letters/emails addressed to the Plaintiff.
2.4 It is stated that Plaintiff continued to sell the products of Defendant
No. 2 through Defendant No. 1. It is stated that the critical role played by the
Plaintiff was at all times under the knowledge of Defendant No. 2 as the said
Defendant was duly marked on all e-mails exchanged between the Plaintiff
and Defendant No. 1. It is stated that Defendant No. 2 actively participated
in the discussions and the sales were completed with the clients with the
express consent of Defendant No. 2. It is stated that Defendant No. 2 at all
times remained copied in the transaction as the quantum of ORC payable to
the Plaintiff was determined by Defendant No. 2.
2.5 It is stated that the products of Defendant No. 2 are high value
products and the Plaintiff herein identified potential clients and nurtured the
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
19:53:43
CS(COMM) 386/2022 Page 2 of 11
said clients to persuade them to purchase the products of Defendant No. 2. It
is stated that the list of potential clients identified by the Plaintiff were sent
to Defendant Nos. 1 and 2 from time to time. The said potential client list
was updated from time to time and is still valid and has been referred to as
Funnel List. It is stated that the Plaintiff is entitled to commission for any
sales made to the said clients enlisted in the Funnel List by the Defendants.
2.6 It is stated that Defendant No. 1 through an email dated 21.07.2020
unilaterally terminated its commercial relationship with the Plaintiff. It is
stated that, however, on the assurance given by the officials of Defendant
No. 2 the Plaintiff continued to work for Defendants thereafter. In this
regard, the Plaintiff relies upon e-mails dated 12.03.2021 and 30.08.2021
received from Defendant No. 1.
2.7 It is stated that the dispute has arisen with respect to invoices for ORC
raised by the Plaintiff for the sales effected on Plaintiff’s clients i.e., namely
Digital Print Hub, Jaipur, and Kuber Digital Studio, Meerut. It is stated that
the sales were affected in November and December of 2021 and the Plaintiff
is entitled to ORC at 4.5% on the net sale price after deducting service cost
and other freebies.
2.8 The plaint has been filed for recovery of Rs. 3.05 crores which
includes the aforesaid 4.5% ORC. The plaint inter-alia seeks a permanent
and mandatory injunction against the Defendants from using the Funnel List
and other proprietary information pertaining to the clients developed by the
Plaintiff.
Submissions of Applicant/Defendant No. 2
3. Learned Counsel for the Defendant No. 2 stated that there is no
contractual obligation between the Defendant No. 2 and the Plaintiff, and,
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
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CS(COMM) 386/2022 Page 3 of 11
therefore, no cause of action exists against the Defendant No. 2. He states
that the Defendant No. 2 has a pan India non-exclusive distribution
agreement with Defendant No. 1, which authorizes Defendant No. 1 to sell
its products, specifically high-end printing presses.
3.1 He stated that Defendant No.1 entered upon an agreement with the
Plaintiff to find buyers for Defendant No. 2’s product for which Plaintiff
would be entitled for commission on every successful sale. He stated that
each sale affected, is a commercial transaction between the Plaintiff and
Defendant No. 1 and the Defendant No. 2 has no role to play or liability
under this transaction qua the Plaintiff. He stated that, therefore, there is no
privity of contract between the Defendant No. 2 and the Plaintiff.
3.2 He stated that perusal of all the invoices placed on record by the
Plaintiff evidence’s that the same are addressed to Defendant No. 1. He
stated that, therefore, Defendant No. 2 has no role to play in this commercial
dispute which has arisen between Plaintiff and Defendant No. 1 for the
alleged non-payment of ORC.
1
3.3 He relied upon Order dated 22.03.2022 passed by MSEFC wherein
on an application filed by the Plaintiff to recover its ORC qua invoices, a
direction was issued by MSEFC to Defendant No. 1; and an amount of
Rs. 24,86,994/- was paid by Defendant No. 1. He stated that Defendant No.
2 was not made a party in the said proceedings as it has no privity with the
Plaintiff.
3.4 He stated that Defendant No. 1 as well in its preliminary objections
forming part of the written statement has categorically admitted that it is
Defendant No. 1, who is solely concerned with all aspects of sales and
1
Micro & Small Enterprises Facilitation Council
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
19:53:43
CS(COMM) 386/2022 Page 4 of 11
payments inter-se with the Plaintiff and the ORC compensation has to be
decided by the Defendant No. 1.
2
3.5 He has relied upon the judgment of Kasturi v. Iyyamperumal , Indu
3
Bai v. Rajendra Kumar Bhandari , and Deputy Commissioner Hardoi
4
Vs. Ramakrishna .
Submissions of Plaintiff
4. Learned Counsel for the Plaintiff admitted that it is a matter of record
that there is no privity of contract between the Plaintiff and Defendant No. 2.
He fairly admitted that the invoices have always been raised by the Plaintiff
on Defendant No. 1 for the ORC and the payments have also been made by
Defendant No. 1.
4.1 He stated that, however, record evidence’s that Defendant No. 2
played an active role in concluding the sale transaction after the potential
client has been identified by the Plaintiff. He stated that evidence on record
shows that the financial terms of the transaction were settled by Defendant
No. 2, which included the final price payable by the client; the commission
payable to Defendant No. 1 and the ORC payable to the Plaintiff. He stated
that thus financial terms of each transaction including the quantum of ORC
payable to the Plaintiff were settled by Defendant No. 2. He illustratively
referred to Defendant No. 1’s e-mails dated 07.09.2021 and 21.05.2019.
4.2 He stated that in the present plaint the claims raised towards ORC,
though payable by Defendant No. 1, would require the sanction of
Defendant No. 2 as in effect the ORC though payable by Defendant No. 1 is
2
(2005) 6 SCC 733
3
2009(5) ALD 402
4
AIR 1953 SC 521
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
19:53:43
CS(COMM) 386/2022 Page 5 of 11
borne by Defendant No. 2. He stated that thus the financial liability is borne
by Defendant No. 2. He stated that thus Defendant No. 2 is a proper party.
4.3 He stated that the Funnel list of potential clients nurtured by the
Plaintiff and forwarded to Defendant No. 1 has been used by Defendant No.
2 for making sales of its products after the termination of the agreement. He
states that the Plaintiff is entitled to ORC on the said sales and/or injunction
against the Defendants from approaching the said clients without
acknowledging the right of the Plaintiff to receive ORC on the said sales. He
states that for this claim as well Defendant No. 2 is a proper party. He states
that the Plaintiff would be entitled to ORC on all sales made to the clients in
the Funnel list at least for a period of three years after the termination. He
states that Defendants are not being entitled to approach the clients enlisted
in Funnel list for at least until three years after the termination of the
agreement, if they dispute the Plaintiff’s rights to receive ORC.
4.4 He relied upon the pleading in the written statement of Defendant No.
1, on page 23 wherein the Defendant No. 1 has stated that the rate of ORC is
determined by the Applicant/Defendant No. 2 and no claim is maintainable
without the approval of Defendant No. 2. The relevant portion of the
pleading in the written statement of Defendant No. 1 reads as under:
“It has been clarified to you on several occasions that the ORC margin is
determined by HP for Redington and ORC Partners on a product-to-
product basis. Therefore, there is no legal or commercial basis for your
claim of Pending ORC of 1% on Rs 54cr of HP Indigo 12000 sale for Rs
54 lacs.”
(Emphasis Supplied)
Submissions of Defendant No. 1
5. Learned Counsel for Defendant No. 1 supported the contentions put
forward by the Defendant No. 2 and states that all the liability for payment
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
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CS(COMM) 386/2022 Page 6 of 11
of commission to Plaintiff, if any, would lie exclusively upon the Defendant
No. 1.
5.1 He stated that Plaintiff is not entitled to its claims for ORC unless
prior approval is granted by Defendant No. 2. He stated that commission is
paid by Defendant No. 2 to Defendant No. 1 and it is passed on to the
Plaintiff.
5.2 He stated that contractually the liability to pay Plaintiff vests with
Defendant No. 1 alone. He states however Plaintiff is not entitled to any
ORC as the said claim has not been approved by Defendant No. 2.
Analysis and findings
6. This Court has considered the submissions advanced by the learned
counsels for the parties and perused the record.
7. The Plaintiff has filed the present suit seeking permanent injunction
against Defendant Nos. 1 and 2 from using the potential clients list curated
by the Plaintiff through its efforts. The injunction is sought on the premise
that the said clients were identified by the Plaintiff for the high-end products
of Defendant No. 2 and, therefore, Plaintiff has a right to receive ORC on
the sales made to the said clients.
8. The Plaintiff also seeks a mandatory injunction against Defendants.
No. 1 and 2 to disclose documents evidencing that sales were affected to the
clients identified by the Plaintiff after the termination of the agreement. It is
sated that Plaintiff is entitled to ORC on the sales affected on the clients post
termination and for this purpose the Plaintiff relies on clause 1(j) of the
Business Associate Agreement dated 07.09.2009, which governed the
relationship between the parties.
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
19:53:43
CS(COMM) 386/2022 Page 7 of 11
9. The Plaintiff has estimated its monetary claims towards the ORC at
Rs. 2.25 crores approximately and has also sought damages of Rs. 35 lakhs
from the Defendants. The Plaintiff also has a monetary claim of Rs. 45.50
lakhs approximately towards investment in manpower for developing the
client data used by Defendants.
10. The principal defence of Defendant No. 1 for opposing the monetary
claim of ORC is that there is no sanction of the said claim by Defendant No.
2 in favour of the Plaintiff. Even during the course of arguments, learned
counsel for Defendant No. 1 submitted that since commission is paid by
Defendant No. 2 to Defendant No. 1 and the share to be passed on to the
Plaintiff is also determined by Defendant No. 2; unless there is a prior
approval of Defendant No. 2, the Plaintiff is not entitled to raise any claims
on Defendant No. 1.
11. Defendant No. 1 also apprised the Court during the course of
submission that as per the practice followed in the past, once the client is
identified and the final price is settled by Defendant No. 2, the commission
receivable by Defendant No. 1 and Plaintiff is also approved by Defendant
No. 2. And, it is thereafter that Plaintiff raised an invoice on Defendant No.
1 for its claim of ORC. It is the stand of Defendant No. 1 that since
Defendant No. 2 has not approved ORC for the claims made in the plaint,
Defendant No. 1 is not liable to pay the Plaintiff.
12. In the considered opinion of this Court, a perusal of the averments in
the plaint and the stand of the Defendant No. 1 shows that the Plaintiff’s
claims for ORC from Defendant No. 1 required prior approval of Defendant
No. 2. Though, the contractual liability to pay the said amounts lay with
Defendant No. 1, however, the prior approval of Defendant No. 2 before
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
19:53:43
CS(COMM) 386/2022 Page 8 of 11
release of the said payment was the practice followed. This was also for the
reason that the cost of the ORC paid by Defendant No. 1 to the Plaintiff was
borne by Defendant No. 2. The rate at which ORC was payable to Plaintiff
was determined by Defendant No. 2 on the basis of the net final price settled
with the client. In these facts, it is apparent that Defendant No. 2 is a proper
party for adjudicating the monetary claims of the Plaintiff as the principal
defence of Defendant No. 1 is the absence of any approval of Defendant No.
2 for the ORC margin on these sales to the Plaintiff for the alleged claims.
13. The Plaintiff has placed on record substantial documentary record
evidencing direct interactions between Plaintiff and officials of Defendant
No. 2 for closing sales to potential clients. The Plaintiff has also placed on
record e-mails of Defendant No. 1 calling upon the Plaintiff to raise the
claims of ORC margin directly with Defendant No. 2. The said documents
thus evidence’s that Defendant No. 2’s approval for ORC margin was
necessary for the Plaintiff to raise its claims from Defendant No. 1. The
impleadment of Defendant No. 2 would, therefore, be necessary to
effectively adjudicate upon the claims of the Plaintiff and the defence of
Defendant No. 1.
14. The Plaintiff has also sought permanent and mandatory injunction
against both Defendant Nos. 1 and 2 from dealing with the clients curated by
the Plaintiff. The said prayer for injunction is based on the assertion that
Plaintiff has a proprietary right over the Funnel list curated by the Plaintiff.
The said relief for injunction is sought directly against both Defendant Nos.
1 and 2. For the purposes of the said relief, Defendant No. 2 is in fact a
necessary party. In fact, there is no reference to the said reliefs sought
against Defendant No. 2, in the captioned application.
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
19:53:43
CS(COMM) 386/2022 Page 9 of 11
15. The Supreme Court in Mumbai International Airport Private
Limited v. Regency Convention Centre and Hotels Private Limited and
5
Others has made pertinent observation about who is a proper party in a
proceeding and the said observation are relied upon by this Court for
deciding this application. In this judgment the Supreme Court also noticed
its earlier judgment in Kasturi (Supra) and explained its ratio. The relevant
paras 15 and 18 read as under:
…….
‘15. A “necessary party” is a person who ought to have been joined as a
party and in whose absence no effective decree could be passed at all by
the court. If a “necessary party” is not impleaded, the suit itself is liable to
be dismissed. A “proper party” is a party who, though not a necessary
party, is a person whose presence would enable the court to
completely, effectively, and adequately adjudicate upon all matters in
dispute in the suit, though he need not be a person in favour of or
against whom the decree is to be made . If a person is not found to be a
proper or necessary party, the court has no jurisdiction to implead him,
against the wishes of the plaintiff. The fact that a person is likely to secure
a right/interest in a suit property, after the suit is decided against the
plaintiff, will not make such person a necessary party or a proper party to
the suit for specific performance.
…..
18. In Kasturi this Court reiterated the position that necessary parties
and proper parties can alone seek to be impleaded as parties to a suit for
specific performance. This Court held that necessary parties are those
persons in whose absence no decree can be passed by the court or those
persons against whom there is a right to some relief in respect of the
controversy involved in the proceedings; and that proper parties are
those whose presence before the court would be necessary in order to
enable the court effectually and completely to adjudicate upon and
settle all the questions involved in the suit although no relief in the suit
was claimed against such person .’
(Emphasis Supplied)
5
2010 SCC OnLine SC 680
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
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CS(COMM) 386/2022 Page 10 of 11
16. Thus, on an examination of the facts of this case this Court finds that
the Defendant No. 2 is a necessary and a proper party for adjudicating the
claims raised in the plaint.
17. This application is accordingly dismissed.
18. It is, however, clarified that all observations made in this order qua
the claims and defences of the parties is not an expression on the merits of
their claims and defences; the said observations have been made only for the
purpose of deciding this application. The rights and contention of all the
parties on the merits of the disputes raised in the plaint are left open.
CS(COMM) 386/2022
19. List on 18.12.2024, date already fixed for consideration on I.A No.
728/2023.
MANMEET PRITAM SINGH ARORA, J
NOVEMBER 19, 2024/ hp/mt/AKT
Signature Not Verified
Digitally Signed
By:Hemant pratap singh
Signing Date:20.11.2024
19:53:43
CS(COMM) 386/2022 Page 11 of 11