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RAJASTHAN CO-OPERATIVE DAIRY FEDERATION LTD. Versus MAHA LAXMI MINGRATE MARKETING SERVICE PVT. LTD.

1996 (9) TMI 631 - SUPREME COURT OF INDIA

C.A. 2679 OF 1992 - Dated:- 17-9-1996 - PUNCHHI, M.M. AND MANOHAR SUJATA V. (J) For The Appellant : Sudhir Gupta, Shahil Rezvi and Aruneshwar Gupta, Advs For The Respondents : H.N. Salve and S.V. Deshpande, Advs. ORDER 1. The appellant, Rajasthan Cooperative Dairy Federation Ltd., issued an advertisement inviting applications for selling agents for its various products for the territories of Rajasthan, Punjab, Haryana, Himachal Pradesh and Delhi, on or about 19th of November, 1988. Seventy appli .....

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....The goods will be issued to you against irrevocable bank guarantee on furnishing from schedule bank on IS days credit basis...(sic). You are requested to submit irrevocable bank guarantee for an amount of ₹ 15 lacs in favour of RCDF, Jaipur. This letter duly signed by you must reach GM (M&P) by 5th of June, 1990 and call on us for execution of the agreement on 12.6.1990...(sic). You are also requested to take preparatory action for starting work within effect from 21st June, 1990 a .....

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respondent No. 1 as the selling agent. The appellant, however, did not release any such an advertisement. Respondent No. 1, however, issued an advertisement in which respondent No. 1 incorrectly described itself as the sole selling agent and further wrongly indicated that it was also the sole selling agent for Polypack Milk. The appellant protested against wrong statement in the advertisement. 3. The contract was not signed on 12th of June, 1990. The respondent did not attend on that date and as .....

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12th of June, 1990; and (2) execution of an agreement with the appellant by 12th of June, 1990. Beside these two conditions, respondent No. 1 had also promised to submit to the appellant its profit & loss account and balance-sheet for the past year before the execution of the agreement. Respondent No. 1 had not done so. The letter also referred to the unauthorised advertisement issued by respondent No. 1 wrongly describing itself as the sole selling agent of the appellant and stated that in .....

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alid. The cancellation of the Letter of Intent was mala fide inasmuch as there were questions asked in the Legislative Assembly about the appointment of respondent No. 1 as a selling agent of the appellant because respondent No. 1 was the brother-in-law of the then Chief Minister. The High Court further said that the appellant had acted arbitrarily in cancelling the Letter of Intent and had violated the principles of natural justice in not giving a hearing to respondent No. 1 before cancelling t .....

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ed by the appellant. Respondent No. 1 had wrongly held itself out as the sole selling agent of the appellant. These are clearly circumstances which are relevant to the cancellation of the Letter of Intent. Also the Letter of Intent clearly set out the conditions which respondent No. 1 had to fulfil. One such condition was submitting an irrevocable bank guarantee for ₹ 15 lacs. This was also not done. Respondent No. 1 contends that it had informed the appellant that it would submit the bank .....

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its knowledge, there was no intention of appointing respondent No. 1 as the sole selling agent, these are valid circumstances which the appellant can take into account in deciding whether to enter into a contract and bind itself legally with respondent No. 1 or not. In these circumstances, if the contact has been cancelled it cannot be considered as arbitrary action on the part of the appellant violative of any Fundamental Rights of respondent No. 1. 6. Respondent No. 1 has tried to rely upon ce .....

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