M/S Kamlesh Trading Company vs. Aasu Khan S/O Moomra

Held

The Court held that the Appellate Court was justified in setting aside the Trial Court's order. The Trial Court had granted an injunction primarily on the ground that there was no document to show the defendants were authorized distributors. However, the Appellate Court, considering the GST Certificate and Food Safety License, found that the defendants purchased goods from different firms, paid GST through tax invoices, and thus established a prima facie case for their right to trade. The Court agreed with the Appellate Court that since the defendants were not party to the dealership agreement, their right to trade could not be curtailed. The Appellate Court rightly set aside the Trial Court's order as arbitrary, capricious, and perverse because it failed to consider material documents. The Court also noted that while appellate courts should generally not interfere with discretionary orders, they can do so if the trial court acts arbitrarily or perversely. The writ petition was dismissed as it did not involve jurisdictional error, apparent perversity, patent illegality, or manifest injustice.

Facts

The petitioner, M/s Kamlesh Trading Company, filed a suit for permanent injunction against the respondents, Aasu Khan and Jaikam Khan, seeking to restrain them from selling Pepsi Brand products in Laxmangarh, District Alwar. The petitioner claimed to be the exclusive distributor appointed by Varun Beverage Ltd. The Trial Court granted a temporary injunction in favour of the petitioner. The respondents appealed this order. The Appellate Court, vide its order dated 10.12.2020, allowed the appeal and set aside the temporary injunction granted by the Trial Court. The petitioner then filed a writ petition before the High Court challenging the Appellate Court's order.

Key Issues

1. Whether the Appellate Court was justified in setting aside the temporary injunction granted by the Trial Court, considering the limited scope of interference with discretionary orders? - Petitioner's argument: The Appellate Court acted arbitrarily and illegally by interfering with the Trial Court's discretionary order, which was based on sound legal principles. The scope of interference by an appellate court with a discretionary order is limited unless it is arbitrary or perverse. - Respondents' argument: The defendants have a right to trade, which cannot be restricted. They were not party to the distributorship agreement and therefore not bound by its terms. Restricting their trade would amount to a restrictive trade practice. The Trial Court's order was arbitrary and legally unsustainable, justifying the Appellate Court's interference. 2. Whether the defendants, not being parties to the distributorship agreement, are bound by its terms, and whether their right to trade can be curtailed? - Petitioner's argument: The petitioner was appointed as the exclusive distributor, and the respondents' distribution rights were terminated prior to the petitioner's agreement. The respondents are infringing upon the petitioner's exclusive rights. - Respondents' argument: The defendants have a fundamental right to trade, and since they are not signatories to the agreement between the petitioner and the company, they cannot be bound by its restrictive clauses. Imposing such restrictions would be a restrictive trade practice.