By- Aastha Singh Law College Dehradun

FACT OF THE CASE

Kanchan Udyog Ltd (appellant) entered into an agreement with United Spirits Ltd (respondent) for the formation of non-alcoholic beverages bottling plant at Dankuni, West Bengal, and sale under the United Spirits Ltd (respondent) trademark, Thrill, Sprint, and McDowell’s sparking soda. The United Spirits Ltd provided technical consultancy for the formation of the plant, assimilated in the Project Engineering Services agreement on 11th September 1985. A Bottler’s agreement assigned on 26th October 1985 was individually accomplished, which is valid for 10 years with continuation choice, accommodating the respective rights and obligations of the parties, along with a marketing agreement. The essence, for preparation of the non-alcoholic signature not verified beverage, was to be supplied by the United Spirits Ltd (respondent).

Kanchan Udyog Ltd (appellant) on 15th December 1985 applied for a loan, disclose “C” to the West Bengal Industrial Development Corporation (WBIDC) for the construction of the bottling plant at an approximate cost of Rs. 226.80 lakhs. Commercial production began on 1st January 1987. The bottler’s accordance was ended by the United Spirits Ltd., (respondent) on 16th March 1988. Commercial production at the plant discontinued in May 1989 and the trial was filed by the appellant in 1990, for the reimbursement and untimely ending the contract. The order granted by a single judge for reimbursement was later rescinded by the division bench and they dissolved the case.

  • Whether the present case is of breach of contract or not?
  • Whether Kanchan Udyog Ltd has the right authority to lodge the complaint against United Spirits Ltd?
  • Whether untimely ending the agreement by United Spirits Ltd (respondent) is the actual cause for loss of anticipated profits?
  • Whether United Spirits Ltd has done breach of contract?
  • Whether  Kanchan Udyog Ltd ( appellant)  can claim both reliance loss as well as an expected loss with regard to anticipated profit from the plant.

RELEVANT CASES

  1. Woman Shriniwas Kini vs. Ratilal Bhagwandas & Co[1] – from this case it was concluded that renunciation could also be inferred from consent or may be suggested. Renunciation is stranding of a right which normally everybody is at liberty to waive. It spells motive rather than firm upon the right.
  2. M/S Murlidhar Chiranjilal vs M/S Harishchandra Dwarkadas & ANR – from this case, the Supreme court examined the scope of section 73 of the Indian Contract Act 1872 that there are two principles on which damages are premeditated. The first, as far as possible to place the contract in a good position and secondly which imposes on the plaintiff to take reasonable steps to reduce the loss.
  3. Pannalal Jugatmal vs. Madhya Pradesh State – from this case court observed that reduction of damage is appropriate in the clarification of section 73 of the Indian Contract Act 1872.
  4. Gallo Limited & Ors vs. Bright Grahame Murray[2]– in this case court held that in instituting the connection of presence is adequate to give rise to a duty of care owed by a company’s auditors to a bank which had advanced money to the company, it was not necessary that the auditors should have deliberated that the bank should depend on the information accommodated in the audited accounts.
  5. M/S Lakhpat Rai Hukum Chand vs. M/S Chedi Ram Rajkumar, AIR 1979 – in this case, the court held that legal action for reclamation of money for breach of a contract can be filed where part of the origin of action emerged.

RELEVANT PROVISION

  1. Section 8 of Indian Contract Act 1872 – when a contract is discharged in particular circumstances of a scheme or receiving of any contemplation for a corresponding assurance which may be provided with a scheme, is a receiving of the scheme.
  2. Section 63 of Indian Contract Act 1872 – each assurance may distribute or abrogate either completely or in a fragment, the presentation of the assurance made to him or may expand the hour for such presentation or may receive alternatively of it any fulfillment which he believes suitable.
  3. Section 62 of the Indian Contract Act 1872 – if both sides of people to an agreement consent to replace a new agreement or cancel or reverse it, the primary agreement required not to be discharged.
  4. Section 73 of the Indian Contract Act 1872 – this section gives information about reimbursement for deprivation or destruction caused by a breach of the agreement. When the agreement has been broken, the person who endured the breach should be given proper reimbursement by the person who broke the agreement. When breach arose naturally or when both the persons knew. Such reimbursement is not granted for any distant and unintended deprivation or destruction assisted by the cause of the breach.

COURT JUDGEMENT

The final judgment came on 19th June 2017, the Supreme Court gave its verdict that Kanchan Udyog Ltd (appellant) was not authorized for any deprivation regarding anticipated profits, for grounds talked about any award of dependency deprivation would more or less to hand a profit to it for what was fundamentally its own mistake. There is no assertion of any insufficiency in the plant. Hence the appellant had failed to establish its hold that the breach by the respondent was the source for loss of anticipated profits. Actual profit appellant was getting from loan appeal and claim for anticipated profit can be claimed. The appeal lacks quality hence dissolves.

SELF ANALYSIS

Owing to the facts and provisions mentioned above, it can be deduced that the untimely ending of the agreement by the respondent was not the reason for deprivation of anticipated profit which was claimed by the appellant. I agree with the verdict of the court. The decision has helped to bring greater legitimacy and public trust in law and order. All in all the concept of awareness to grant deprivation of anticipated profits by breach of agreement, it was clasp in the fact of the case that it was not the consequence of the breach, but was a configuration of different components like an absence of brand acceptance, the financial crunch of the appellant and lack of adequate infrastructure by it. The demand for destruction was, therefore, far off as there was not even a hypothesized possibility for building profit by the appellant. The appellant had failed to take action for the reduction of destruction.

Citation

[1] 1959 SCR 21

[2] (1994) 1 WLR 1360.

KANCHAN UDYOG LIMITED V. UNITED SPIRITS LIMITED

Leave a Reply

Your email address will not be published. Required fields are marked *