Arun Kumar, J.

1. Pepsi Foods Limited (hereinafter referred to as PFL) is a company duly incorporated under the Indian Companies Act, 1956 having its registered office at 307-308, Sector 35-B, Chandigarh, India. The Company is a joint venture of M/s. Pepsico Inc., N.Y. USA, M/s. Voltas Limited and M/s. Punjab Agro Industries Corporation Limited. M/s. Pepsi Inc., defendant No. 3 is a multinational company which is well known for its soft drinks under the brand name Pepsi. One of the objects for floating defendant No. 2 was to update the processed food technology in India and to export processed food products as an incentive. The Company was allowed to manufacture soft drinks concentrates and market soft drinks under the brand name Pepsi. PFL has appointed various bottlers in specified territories in India for bottling and marketing the soft drinks. For this purpose PFL supplies the soft drinks concentrate to its bottlers. Defendant No. 3, i.e. Pepsi Inc. holds trade marks for its popular drinks known as Pepsi, 7 Up, Miranda and Ever Vess. Under the bottling agreements the licence to use these trade marks is granted by defendant No. 3 to the bottlers. Defendant No. 2 further registered a trade mark Lehar which is to be used by the bottlers appointed by it for its various soft drinks along with popular trade marks Pepsi, 7Up etc.

2. Under an agreement dated 5.11.1990 PFL appointed the plaintiff to bottle and market the soft drinks under various trade marks of defendants 2 and 3. On the same date separate licence agreements were executed between defendant No. 3 and the plaintiff permitting the plaintiff to use the trade mark of defendant No. 3 in Pepsi, 7 Up and Miranda. Another licence agreement was executed on 1.12.1990 between the plaintiff and defendant No. 3 regarding the soft drink Ever Vess. PFL had to supply the concentrate for the manufacture of the soft drinks by the plaintiff under the various popular brand names. PFL sought to terminate the bottling agreement with the plaintiff for which it issued two notices both dated 6th December, 1991. Thereafter the parties admittedly entered into another agreement (known as Supplemental Agreement) on 31st March, 1992. As per the Supplemental Agreement the original agreement was to stand terminated with effect from 30th September, 1992. The plaintiff filed the present suit on 26th September 1992 challenging the termination of the agreement between the plaintiff and PFL regarding appointment of plaintiff as bottler and supplier/distributor of soft drinks in the territory specified in the agreement. The plaintiff also filed an application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure along with the plaint for an ad interim injunction to restrain defendant No. 2 from treating the agreement as terminated and for direction to defendant No. 2, i.e. PFL to continue to supply the soft drinks concentrate to enable the plaintiff to bottle and market the soft drinks. When the suit and the interim application came up for hearing on the first date, defendants 1 and 2 put in appearance in Court since they had already filed caveats on behalf of their respective parties and opposed the grant of any interim order. Counsel for defendant No. 2 made a statement at the Bar that PFL will not appoint any manufacturing bottler in place of the plaintiff till the next date of hearing. No other interim relief or order was granted. After the replies and rejoinders were filed to the interim application, the matter was heard at length. This order will dispose of the plaintiffs applications I.A. Nos. 12158 and 12250 of 1992.

3. The case of the plaintiff is that the arrangement between the parties was envisaged as a long term arrangement. As per the Bottlers Economics worked out by the defendants a long term arrangement for at least a period of ten years had to be there in order to enable the franchisee to recoup its investment. The Bottlers Economics was a document of defendants 2 and 3. The plaintiff had made an application for the bottling agreement on 15th March, 1989. The plaintiff located the land at Sahibabad for its factory in April, 1989. It was approved by PFL. On 1st May, 1989 letter of intent was issued by defendant No. 3 to plaintiff stating that franchise would be issued only if pre-conditions and time limits are met. On 25th May, 1989 PFL confirmed to plaintiff its intention to enter into the bottling agreement upon requisite pre-conditions being met. In October, 1989 plaintiff applied to the I.C.I.C.I. for financial assistance stipulating return of capital in seven years. The plaintiff further made arrangements for the empty bottles. It incurred huge expenses on advertisement. It also incurred a liability towards the electricity supply undertaking on account of minimum guarantee charges for the electricity load required for the plaintiffs factory. From this the endeavour of the plaintiff is to show that even before the actual agreement which was to be entered into between the parties was negotiated,the plaintiff had incurred heavy expenses and had also committed itself to heavy liability in order to prepare itself for the franchise which was going to be granted to it. According to the plaintiff it had already committed itself and had undertaken such a heavy financial burden in the hope of having a long term relationship which alone would have enabled the plaintiff to recoup its investment it is further the case of the plaintiff that the proposed agreement was made available to the plaintiff only in early May, 1990 by which date the plaintiff was already heavily committed by way of financial obligations and it was in no position to bargain with PFL or to object to the termination clause contained in the agreement. The main grievance of the plaintiff qua the bottling agreement dated 5th November 1990 is the termination clause in the said agreement, i.e. Clause 23. The said clause is reproduced as under:-

23(a) Upon the happening of any one or more of the following events,in addition to all other rights and remedies, PFL shall have the right to cancel and terminate this Agreement by written notice effective immediately to the Bottler:

(i) The failure of the Bottler to perform or comply with any one or more of the terms or conditions of this appointment;

(ii) Any sale, transfer, change or ownership, transmission or other disposition, whether by operation of law or otherwise, without the prior written consent of PFL which in its absolute and unqualified discretion may be withheld;

(a) Of allor part of the Bottlers bottling business, or

(b) If the Bottler is other than a natural person, any sale, transfer or other disposition (including, but not limited to, merger, consolidation or dissolution, of the stock, shares of interest or other evidence of ownership of Bottler, Bottlers parent, affiliate of other related organisation) which results directly or indirectly in the change of more than ten percent (10%) of control or ownership of the Bottler or of any entity which directly or indirectly owns or controls the Bottler;

(iii) The discontinuance of the bottling of the Beverage by the Bottler, for any reason whatsoever, for a period of thirty (30) consecutive days;

(iv) The insolvency of the Bottler; or the assignment by the Bottler for the benefit of creditors,or the filing of a voluntary bankruptcy, judicial liquidation, or reorganisation petition by the Bottler, or the failure of the Bottler to vacate an involuntary bankruptcy or reorganisation petition filed against the Bottler within sixty (60) days from the date of such filing, or the failure of the Bottler to vacate, set aside or have dismissed any insolvency proceeding involving the Bottler under any applicable law within sixty (60) days from the date of the commencement of any such proceeding, or the dissolution of the Bottler for any cause whatsoever. The term Bottler in this paragraph shall include any individual or entity which directly or indirectly owns or controls the Bottler;

(v) A change of the Bottlers management or control of the Bottlers bottling business by virtue of any law, decree, order, rule, regulation, ordinance or any other similar cause;

(vi) The termination or expiration at any time of an agreement, licence or arrangement, if any, whereunder the Bottler is authorised to bottle, sell and distribute another product under any other trade mark/s of PFL in the Territory or elsewhere.

(b) Upon the happening of any one or more the foregoing events the Seller shall also have the right to discontinue supplying the Bottler with Units and/or other materials for such length of time as the Seller may in its sole judgment deem necessary without PFL thereby cancelling or terminating this Agreement and without thereby prejudicing PFLs right to cancel or terminate this Agreement for the same cause or for any one or more other causes;

(c) In addition to and not in limitation of the foregoing, if, in the reasonable opinion of PFL, the Bottler should at any time default under Clause II, PFL may call the Bottler, attention to such failure by written notice to the Bottler, specifying the deficiency, and suggest remedial steps therefore. If, in the reasonable opinion of PFL, said failure shall not have been corrected within three months after the giving of such written notice, PFL shall thereupon have the right, upon written notice to the Bottler to that effect, effective immediately, to terminate this Agreement.

(d) This Agreement shall terminate automatically and forthwith upon the termination of the arrangement between Pepsico and the Bottler for the use of the Pepsico Marks, as stated in paragraph 4 above.

(e) Notwithstanding anything to the contrary herein contained, PFL shall have the right to terminate this Agreement, by giving to the Bottler a 12 months notice in writing without assigning any reasons for such termination.

4. Learned Counsel for the plaintiff has pointed out that the bottling agreement itself provides that it is initially for a period of ten years with renewability clause for another five years. In view of the fact that plaintiff had incurred such heavy financial obligations and the agreement itself was envisaged for at least ten years, the termination clause in the agreement cannot be allowed to exist. Qua the termination clause also the attack mainly is to Sub-clauses (c) and (e). Sub clause (c) provides for three months notice on account of defects pointed out by PFL in the working out of the obligations of the plaintiff under the agreement. Clause (e) provides for termination of the agreement by giving 12 months notice without assigning any reason. To complete the narration of facts necessary for purposes of deciding the present application it is to be noted that on 6th December, 1991 PFL issued to the plaintiff two separate notices under Clause 23 of the agreement. One was a three months notice under Clause (c) pointing out certain defects in working of the plaintiff. The other was 12 months notice of termination of the contract without assigning any reason under Sub-clause (e). According to the defendant these notices remained unreplied. The plaintiff has tried to submit that a reply to the defect notice was sent in February 1992 under Postal Certificate. PFL has denied receipt of any such reply. Further a letter of the plaintiff dated 18th March, 1992 addressed to PFL has been placed on record which says that Unikol, i.e. the plaintiff had withheld reply to the two notices of PFL dated 6th December, 1991. Thus this letter which is not in dispute, prima facie belies the stand of the plaintiff that it had replied to the notice of PFL relating to defect liability. In March, 1992 the parties negotiated another agreement which was finally executed on 31st March, 1992 which provides that by 30th September 1992 the original agreement dated 5th November, 1990 will stand terminated and the rights and obligations of the parties under the said agreement would cease. The precise language of the relevant clause of the said agreement is Whereas in an effort to amicably resolve the issues, both parties have agreed to continue with the said Agreement upto September 30, 1992, subject to the condition that on September 30, 1992, the said Agreement shall terminate and expire as also certain further terms and conditions as hereinafter set out. The present suit was filed on 26th September, 1992, i.e. just before the date of expiry of the Supplemental Agreement.

5. According to the plaintiff PFL could not terminate the contract and Clause 23 of the original agreement under which PFL exercises its right to terminate the contract is illegal and void. Regarding the Supplemental Agreement dated 31st March, 1992 it is submitted that the same is also bad and unenforceable and the original agreement dated 5th November, 1990 subsists. PFL is liable to continue to supply concentrate for making the soft drinks to the plaintiff and the plaintiff is entitled to continue to manufacture and market the soft drinks as envisaged in the said agreement. In support of this stand the learned Counsel for the plaintiff has urged various points. They are:

1. The franchise agreement is a standard form of contract, leaving no option to plaintiff.

2. Right of the franchiser to terminate such a contract specially in view of the heavy investment which the franchisee is made to incur to have the necessary infrastructure for carrying out its obligations under the contract.

3. Unequal bargaining power of the plaintiff as against PFL which is backed by a multi-national giant.

4. Duress/coercion exercised by PFL in making the plaintiff enter into such type of a contract.

5. Termination clause in the contract has to be treated as an unconscionable and as such the same is liable to be struck down.

6. Is the right to terminate a contract justiciable

7. Can breech of agreement be made non-justiciable by providing so in the agreement itself which will be violative of Section 28 of the Contract Act

8. What type of breach will entitle a party to terminate a contract Is it to be a breach of a substantial term of contract or any trivial breach that will give a right to the other party to terminate a contract

9. Can a party which seeks to terminate a contract be itself the sole judge of the nature and extent of the breach which would enable it to terminate the contract

10. Unjust enrichment, i.e. PFL would take advantage and reap the fruit of the heavy expenses incurred by the plaintiff in developing a market for the products of PFL.

11. Damages will not be an adequate relief.

The Supplemental Agreement is attacked on the following grounds:

(1) The agreement was by way of novation. There should have been consideration for the agreement. Forbearance to exercise the right of termination for a limited duration cannot be a valid consideration.

(2) The Supplemental Agreement is collateral to the main agreement. If the offending clauses of the main agreement are declared invalid and illegal, the Supplemental Agreement itself goes with it, If clause 23 goes, the Supplemental Agreement also goes.

(3) EstoppelIn August 1992 the PFL asked the plaintiff to introduce 500 ml bottles. From this the plaintiff submits that it was made to incur additional expense for purposes of introducing a new product. If the agreement was to stand terminated by the end of September, 1992, there was no occasion to ask plaintiff to arrange 500 ltr. bottles.

(4) Duress/coercion. The agreement is product of unequal bargaining power.

6. The learned Counsel for the plaintiff has laid special emphasis on the fact that the defendants Bottlers Economics encouraged the plaintiff to understand that the arrangement between the parties was going to be a long term affair. This is evidenced by the fact that the agreement itself provides for a period of ten years subject to renewal by another five years. This led the plaintiff to make heavy investments on its part-build its infra structure, incur expenses on building goodwill for the product, the plaintiff undertook obligations involving long term financial burden. Thus the plaintiff was led up the garden path by defendants 2 and 3. After all this the defendants want to exercise the power to repudiate the contract. To suppose that any person who would enter into a contract of this kind with such power of termination vesting in one party would be entirely an irrational supposition. This would give the multi national power to render all the expenses and trouble undertaken by the Indian entrepreneur wholly fruitless by revoking the agreement. It is common knowledge that when a new project is launched, no one can expect the real benefit of its efforts to accrue in the first few years. Courts will strain the language of such clause or clauses giving power of termination to keep them within reasonable limits. Where, however, language cannot be stretched beyond a limit, there is the vigilance of common law which while allowing freedom of contract, watches to see that it is not abused.

For when the parties have not met on equal terms, it is not right that the strong should be allowed to push the weak to the wall and the Courts are no longer powerless to set aside such terms in the contract. This power is of comparatively recent origin. It is the result of concentration of particular kind of business in one hand or in few hands. The term of this kind of standard form of contract has not been the subject matter of negotiations between the parties to it. It has been dictated by the party whose bargaining power enables him to say if you want these goods or services, these are the only terms on which they are obtainable. Take it or leave it.

Such power of termination contained in any term in the contract becomes much more invidious when a party is allowed to make investment of capital, labour and services on the understanding that they will have a contract in its favour to sell the product of the multi-national company and when he has done all that, it is presented with a standard form of contract that stipulates long duration of 10 to 15 years but containing unilateral power of termination on the part of the multi-national company at any time without reason or on a self-opinionated reason of default. Such a term would be the result of domination of the will of the party to obtain unfair advantage over it and would be wholly unreasonable and unconscionable liable to be struck down as void under Section 16 of the Indian Contract Act.

7. As already noticed PFL sought to exercise its right to terminate the agreement dated 5th November, 1990 by issuing two separate notices to the plaintiff under Clause 23(c) and Clause 23(e) of the agreement. In the notice under Clause 23(c) certain defects and deficiencies were pointed out by PFL and the plaintiff has been called upon to correct the same within three months. Failure to carry out the corrections gives the right to PFL to terminate the agreement forthwith. The other notice is a 12 months notice of termination without assigning any reason for such termination under Clause 23 (e) of the agreement. It is really the defect notice under Clause 23 (c) which held out to the plaintiff immediate threat of termination of the agreement. Therefore, the Counsel for the plaintiff has been at pains to point out that the alleged breaches /deficiencies pointed out in the notice by PFL are trivial in nature and in any case cannot empower PFL to terminate the contract. In this connection the learned Counsel has raised various legal issues of great importance which need to be noticed at this stage.

Power to terminate a contract is a very drastic power and is justiciable. It is subject to various conditions which govern the judicial discretion as to whether to allow termination or not, such as

(a) whether the breach is such that it goes to the very root of the contract, destroys its foundation, deprives the other party of substantially the whole benefit of the contract;.

(b) whether it will lead to unjust enrichment of the party seeking to terminate the contract;

(c) how far the performance of the contract by the party against whom termination is sought has gone and what is the ratio of the failure on the part of the party against whom the termination is sought, to the performance of the contract already made by it;

(d) whether the party seeking termination of the contract for any breach, can be compensated with damages for that breach;

(e) whether the term breach of which is complained of has been specified with express precision;

(f) whether the term breach of which is complained of, is a condition, warranty or an intermediate term, and if it is an intermediate term, whether its breach should lead it to termination of the contract or not. The Court will further consider the consequences of the breach while deciding whether the particular term is a condition, a warranty or an intermediate term. Whether the act or conduct of the party against whom termination is sought, are such that it amounts to an intimation of any intention to renounce or altogether to refuse performance of the contract;

(g) what will be the consequences of the termination to the party against whom breach is alleged as against the consequences to the injured party, and whether in balancing the conflicting interest it will not be more just and fair to refusal, rescission or termination of the contract;

(h) when a clause gives the right to terminate the contract for breach of any term, whether the term has particularized with precision specifying any particular requirement, and if so, whether it is such term that breach of it goes to the root of the contract destroying its foundation, depriving the other party substantially the whole benefit of the contract;

(i) whether the breach in term is strictly covered by the term or not

8. The above is of course without prejudice to the plaintiffs case that Clauses 23(c) and 23(e) of the agreement are liable to be declared void under Section 16 of the Contract Act. They are unreasonable, oppressive, against public policy and public interest being part of standardised contract entered into between a monopolistic multi-national company and an Indian entrepreneur whose capital, labour, enterprise and services for selling the product of the multinational have been utilised. Such clauses are also void being in contravention of Section 23 of the Contract Act. If these clauses are declared illegal and void, the notices issued by PFL under these clauses fall automatically.

9. According to the learned Counsel for the plaintiff these clauses of the contract are also hit by Section 39 of the Contract Act. No party can be allowed to be a judge in its own cause. No party can have the right to determine whether the other party has committed a particular default and on that basis assume to itself the power to terminate the contract. This will amount to ousting the jurisdiction of the Courts and will be hit by Section 28 of the Contract Act. None of the defaults alleged in the default notice can be brought within the ambit of Section 39.

10. In support of his aforesaid contentions learned Counsel for the plaintiff has cited various judgments, besides texts from certain reknowned authors on the subject.

11. In his reply the learned Counsel for the defendants has refuted the arguments advanced on behalf of the plaintiff. It is submitted that all the arguments raised on behalf of the plaintiff in relation to the original agreement dated 5th November, 1990 could have been possibly advanced if there had been no Supplemental Agreement. After the Supplemental Agreement these arguments are no longer available to the plaintiff. In this connection it has been emphasised that the Supplemental Agreement was admittedly entered into between the parties after due deliberation and after its draft was approved by the plaintiff. The Supplemental Agreement was allowed to run its full course and the plaintiff has raised the protest only in the shape of the present suit filed on 26th September, 1992 when the time fixed under the Supplemental Agreement was about to expire. The learned Counsel for the defendants has made it clear that this does not mean that the defendants accept the argument on behalf of the plaintiff regarding the agreement dated 5th November, 1990. Defendants have tried to meet those arguments on merits also.

12. In substance the defence set up by the defendants is:

1. In the prayer clause in the plaint no relief has been sought regard- ing the Supplemental Agreement and so long as the Supplemental Agreement remains unchallenged the plaintiff cannot seek any relief.

2. In view of Section 14 of the Specific Relief Act, the plaintiff is not entitled to any relief.

3. In view of the Supplemental Agreement it is a case of consensual termination of the agreement as envisaged under Section 62 of the Contract Act.

4. The agreement dated 5th November, 1990 was fully negotiated, draft had been sent to the plaintiff in January, 1990 and thereafter in May, 1990. Therefore, the plaintiff was fully aware of the nature and contents of the agreement which was going to be executed between the parties. There is no scope for urging duress/coercion.

5. The argument based on unequal bargain power, duress/coercion is not open to the plaintiff in view of the facts and circumstances of this case.

6. It is not a case of stadardised form of contract. Such contracts are those like the Railway Ticket cases where there is no negotiation between the parties. The plaintiff firm consists of experienced businessmen of long standing. They have a lawyer on their Board of Directors. They entered into the contract with open eyes and after they had had opportunity to ponder over it.

7. It is normal to have a termination clause in all such agreements. The franchiser has high stakes in the contract in as much as its goodwill and reputation of the brand name is involved. Therefore, quality control and proper marketing of the product are very important to -the franchiser. The franchiser cannot be made to stick to a party which does not come up to its standards and in the process ruin its goodwill and brand name. For these reasons commercial contracts can never be in perpetuity and even if in a contract there is no termination clause, the contract will be allowed to be terminated through a reasonable notice if the power to terminate is sought to be exercised bona fide. For this reliance is placed on Decro Wall International SA v. Practitioners in Marketing Limited, (1971) 2 All.ER 216. In this case the agreement was oral and, therefore, there was no termination clause. The agreement was allowed to be terminated through a 12 months notice which was considered to be a reasonable period. Here also the defendant was appointed as the sole distributor for the products of the plaintiff in England and for this purpose the defendant had made lot of investment and incurred huge expenses in advertising the product of the plaintiff in its territory.

8. The plaintiff committed defaults in performance of its obligations under the agreement, therefore, as per the terms of the agreement PFL was entitled to terminate the same. According to PFL there were serious defaults on the part of the plaintiff.

9. The Supplemental Agreement was fully discussed and its draft approved before the final agreement was executed. The recitals in the agreement provide Whereas in an effort to amicably resolve the issues, both parties have agreed to continue with the said Agreement upto September 30, 1992, x x x. This means that the Supplemental Agreement was meant to amicably resolve the pending issues between the parties. PFL had already served notices on the plaintiff regarding termination of the agreement. The consequence of the default notices was that the agreement was liable to be terminated forthwith when the threat of termination was looming large why did the plaintiff agree to continue the agreement for a further period of six months only The plaintiff could have at that stage sought its remedies against termination of the original contract. It is plaintiffs own case that six months extension was not any big advantage to the plaintiff. Therefore, why did the plaintiff wait for the period of six months to expire before raising these issues regarding the original contract.

10. The plaintiff came to Court after allowing the Supplemental Agreement to practically run its full course. Thus the plaintiff took advantage under the Supplemental Agreement and chose to come to Court after it was almost over. This totally disentitles the plaintiff to any relief at least at this stage.

11. The argument of domination of Will of the plaintiff by PFL or duress is not open qua the Supplemental Agreement because the plaintiff could have raised all the legal issues sought to be raised now before entering into the Supplemental Agreement. Instead the plaintiff chose to enter into the said agreement and take benefits thereunder.

12. The consideration for the Supplemental Agreement is the discharge of the respective mutual obligations of the parties under the original agreement. Section 62 of the Contract Act applies.

13. The plaintiff accepted the fact that the arrangement between the parties was coming to an end on 30th September, 1992 in view of the Supplemental Agreement. This is evidenced by the plaintiffs letters addressed to the Labour Commissioner within whose jurisdiction the plaintiffs factory is located. In these letters the plaintiff has informed the authorities that their factory is to be closed down with effect from 30th September, 1992 because the arrangement with PFL was coming to an end. This shows that the plaintiff accepted the situation and was prepared for it.

13 According to the learned Counsel for the defendants the Supplemental Agreement seals the fate of the plaintiffs case. The Supplemental Agreement was admittedly executed between the parties. It was fully negotiated and discussed in the background of the two termination notices whereby PFL had exercised its right to terminate the original agreement. Therefore, there was no love lost between the two parties. Draft of the Supplemental Agreement was with the plaintiff and plaintiff made its suggestions thereon. Regarding the clause for putting an end to the original agreement by 30th September, 1992 the only comment of the plaintiff was unless mutually extended Termination as on 30th September, 1992 was thus accepted. This leaves no scope for the argument that the original agreement subsists and should be allowed to operate.

14. I have given my careful consideration to this aspect of the case. If the Supplemental Agreement is upheld, all the arguments of the plaintiff in relation to the original agreement need not be gone into because the Supplemental Agreement terminates the original agreement by mutual consent. This aspect of the case to my mind is decisive at least so far as the question of grant of interim relief as per prayers of the plaintiff in the present applications is concerned. The interim reliefs sought are:

(a) restraining defendants Nos. 2 and 3 from appointing any other bottler or granting the manufacturing/bottling and distribution rights to any other bottler/manufacturer or person for the area earmarked for the plaintiff as its franchise territory after 30 September, 1992 until the disposal of the suit.

(b) restraining defendant No. 1 or any other person from manufacturing, operating/distributing or selling the products namely Lehar Pepsi, Lehar Mirinda, Lehar 7-UP and Lehar Ever Vess Soda w.e.f. 1.10.92 within the territory earmarked for the plaintiff;

(c) restraining defendant No. 2 from discontinuing the supply of soft drink concentrates manufactured by defendant No. 2 to the plaintiff as per the plaintiffs requisition from time-to-time and till the disposal of the suit.

(d) restrain the defendants No. 2 and 3 from appointing any distributor for the territory assigned to the plaintiff with effect from 1.10.1992 till the matter herein is heard by this Honble Court at the interim stage; and

(e) that the defendant No. 1 be directed to return the 20 trucks taken on hire from the plaintiff on 1.10.1992.

15. None of the interim reliefs sought can be granted to the plaintiff if the Supplemental Agreement is valid. The Supplemental Agreement puts and end to the original agreement. Assuming for the sake of argument that the points raised on behalf of the plaintiff to challenge the original agreement dated 5th November, 1990 are valid and it is held that the termination clause (Clause 23) of the agreement is illegal and inoperative, the right of the parties to put to an end to their contractual obligations cannot be doubted. That right will always exist. Salmond has observed:

Just as a contract is created by the agreement of the parties, so it may be dissolved by the same means. The vinculum juris of contractual obligation may be severed and destroyed by mutual consent just as it was constituted thereby. The agreement which thus dissolves a contract is not in itself a contract, but is an agreement of an essentially different legal nature. A contract is an agreement by which rights and obligations are created, not one by which they are destroyed; it is an agreement whereby the parties become bound together by a bond of legal obligation, not one which releases them from such a bond. An agreement of dissolution is the consensual surrender and extinction of rights and obligations, and not, like a contract, the consensual creation of them. It is true, indeed, that an agreement for the dissolution of a contract is often associated with a true contract made at the same time; for the parties, while dissolving their, contract, may at the same time enter into a new contract in substitution for it, or as consequential on its dissolution. This, however, is not necessarily the case. An agreement may be one of dissolution simplicitor without any additional or accessory contractual element; and even when such an element does exist it remains true that the agreement, so far as it dissolves the contract, is not itself contractual in its nature, but is as distinct from a contract as a grant or assignment is.

Law of Contracts by Salmond & Winfield. 1927 Ed. page 315.

16. Thus the parties can always agree to terminate an existing contract. If the Supplemental Agreement is valid, it will follow that the same puts an end to the original agreement. Nothing will survive. The question as to what type of breach will entitle a party to terminate a contract will become wholly irrelevant, like so many other questions raised by the learned Counsel for the plaintiff challenging the termination clauses in the original agreement. Similarly the question of unequal bargaining power duress/coercion, etc. will become academic having no consequences on the decision of the case at this stage.

17. In case of termination of contract by consent of parties the question as to whether a contract can be rescinded by a party because of an essential term being broken does not arise. That inquiry is only pertinent where the contract is not dissolved by the parties or the contract does not provide for termination and the termination is sought to be invoked as a legal consequence of breach by one of the parties, the law being that any and every breach does not produce that result and only a vital or fundamental breach brings about that consequence.

18. When this is the inevitable impact of the Supplemental Agreement, it is unnecessary to examine the arguments on behalf of the plaintiff regarding the original agreement. Therefore, the validity of the Supplemental Agreement alone need be gone into at this stage.

19. This leaves me with two questions. One, consensual termination of a contract and second, validity of the Supplemental Agreement in the light of objections raised against it by the plaintiff.

A contract can be terminated or rescinded in several ways, namely,

1. Release under seal.

2. Rescission by consent of parties.

3. Accord and satisfaction.

4. Exercise of option given to a party in a contract to terminate under certain circumstances or events.

5. Rescission by a party on account of repudiation or non-performance by the other party.

6. Frustration or impossibility of performance.

20. In the present case it is urged on behalf of the defendants that it is a case of termination of contract by consent of parties. It is always competent for the parties to rescind a subsisting contract by an agreement to that effect. Persons competent to contract can as validly agree to rescind a contract already made as they could agree to make it originally. (American Jurisprudence, IInd Ed. page 490). The concept of consensual termination of an agreement was noted in Union of India v. Kishori Lal Gupta & Bros., AIR 1959 SC 1362 [LQ/SC/1959/140] .

21. In this connection the provisions of Section 62 of the Contract Act need be noticed.

62.The fact of novation, rescission and alteration of contract

If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original con tract need not be performed. Thus there can be no doubt that parties to a contract can agree to put an end to their respective rights and obligations under the contract. If such an agreement is valid, the consequence would be that the agreement which is sought to be terminated may come to an end.

This is precisely what the defendants have contended before me. They say that the Supplemental Agreement is a valid document admittedly executed between the parties which specifically and in so many words puts an end to the mutual rights and obligations of the parties under the original agreement dated 5th November, 1990 with effect from 30th September, 1992.

22. Before dealing with the specific points of attack by the plaintiff qua the Supplemental Agreement, it will be appropriate to say something about the agreement itself. It has already been noted that before the agreement was brought about, differences had already arisen between the parties. PFL had already served the two notices of termination of the agreement. A reference to the Supplemental Agreement shows that default clauses are mentioned in the recitals. Further it shows that PFL has maintained that Unikol failed to carry out the rectifications and, therefore, PFL had the right to immediately terminate the agreement. Unikol on its part denied this. Then the agreement goes on to say: in an effort to amicably resolve the issues, both parties have agreed to continue with the said agreement upto September 30, 1992....

Use of the words amicable settlement shows that plaintiff was allowed further six months time to give it a try and see if things could improve. If the mutual relations and working of the agreement to mutual satisfaction improved during this period, the parties could always agree to extend the agreement further, even if it was not specifically stated so. One thing, however, is quite clear from a perusal of the agreement that it contains nothing which may suggest or create a hope in the plaintiffs mind that the original agreement would be continued on a long term basis. On the other hand it is clear from defendants letter dated 28th August, 1992 addressed to the plaintiff that the things did not improve. This letter gives a complete picture of the working of the arrangement between the parties right from the beginning and the defendants grievance about the way the plaintiff was functioning. It shows how PFL remained dissatisfied about the plaintiffs functioning throughout. In such circumstances it was natural that the parties resolved to put an end to the original agreement.

23. This brings me to the question of examining the validity of the Supplemental Agreement in the light of objections raised thereto on behalf of the plaintiff.

24. As already noticed the Supplemental Agreement has been attacked by the Counsel for the plaintiff on the following grounds:-

The Supplemental Agreement is void for want of consideration. Illegal threat to terminate the existing franchise agreement cannot constitute lawful consideration for the Supplemental Agreement.

25. Whether the threat to terminate the original contract was legal or illegal is yet to be decided. If it was legal, the argument fails. However, we have the Supplemental Agreement admittedly executed between the parties. By this document parties agreed to terminate their relationship with effect from 30th September, 1992. In the face of this admitted document no injunction contrary to the document can be granted. Question is whether for purposes of grant of injunction something which is in controversy should prevail or something which is admitted should prevail Answer has to be only one. There can be no two opinions.

26. The learned Counsel for the plaintiff has contended that the Supplemental Agreement seeks to modify the original agreement and is, therefore, by way of novation and as such it requires consideration. Through the Supplemental Agreement the defendants have only postponed their alleged right to terminate the original contract by six months. Forbearance to exercise the right of termination for a limited duration cannot be a valid consideration according to the learned Counsel. This contention in relation to the facts of the present case appears to be totally misconceived. Section 62 of the Contract Act recognises the right of the parties to agree to put an end to a contract. The mutual agreement to put an end to existing rights and obligations of the parties under a contract is not by way of novation. It is a decision of the contracting parties to put an end to the contract. In other words, it is termination of a contract simplicitor. Salmond has beautifully put this in the following words:

the vinculum juris of contractual obligation may be severed and destroyed by mutual consent just as it was constituted thereby.

If at all consideration is needed it can be found inasmuch as both the parties agree to give up their respective rights and benefits under the original agreement as also they release each other from mutual burdens and obligations under the agreement. The discharge of one party from its obligation to perform further is a sufficient consideration for discharge of the other party from further performing its obligations under the contract. Therefore, I do not find any substance in this ground of attack on the Supplemental Agreement.

27. Next the plaintiff attacks the Supplemental Agreement on the ground that the same is co-lateral to the main agreement and if the offending clauses of the main agreement are declared illegal and invalid, the Supplemental Agreement itself will fall. I am unable to hold that the Supplemental Agreement is co-lateral to the main agreement. The Supplemental Agreement, as its recitals clearly suggest, is by way of amicable settlement of the issues pending between the parties. It in fact notes the main point in issue, i.e. PFLs assertion about defaults on the part of the plaintiff in carrying out its obligations under the contract and plaintiffs denial thereof. After noting this point in issue the agreement goes on to record that this issue is amicably resolved by keeping the original agreement alive only up to 30th September, 1992. Therefore, the Supplemental Agreement is simply an agreement to put an end to the mutual rights and obligations of the parties under the parent agreement. I have already expressed that even if Clause 23 of the parent agreement is held to be invalid and illegal it does not affect the right of the parties to terminate the agreement by mutual consent. This right of the parties is their natural right flowing from the concept of freedom of contract. Just like the parties enter into a contract of their own free will, they have a right to put an end to a contract according to their free will. The submission of the learned Counsel for the plaintiff that if Clause 23 of the parent agreement goes, the Supplemental Agreement goes along with it is, therefore, totally untenable. Similarly the ground of estoppel raised by the plaintiff on the basis of the plaintiff being required to introduce 500 ml. bottles in August 1992 is without any substance. In this connection it has to be noted that according to defendant No. 1, the expenses on the 500 ml. bottles were incurred totally by defendant No. 1 and, therefore, the plaintiff was not out of pocket on this account. Secondly, when the relationship was continuing between the parties whatever exigencies of normal functioning may involve had to be carried out and this by itself does not mean that it creates any right in the plaintiff to urge that the contract ought to be continued. Equally this by itself does not stop the defendant from treating the contract as terminated with effect from 30th September, 1992.

28. Coming to the point of duress/coercion unequal bargaining power, the relevant facts have to be seen to come to a conclusion one way or the other. First thing to be noted in this connection is that the pleadings of the plaintiff in this respect are lacking in material particulars. General allegations have been made without mentioning requisite material in support thereof. For this reason alone it has been submitted on behalf of the defendants that the plaintiff is not entitled to be heard in this respect. Without prejudice to this objection of the defendant, I have proceeded to examine the plea because the issue raised is of some importance.

29. For a valid contract it is essential that the parties have given their free consent for it. Section 10 of the Contract Act statutorily recognises the requirement of free consent for a valid contract. Section 13 of the Contract Act defines consent as follows :two or more persons are said to consent when they agree upon the same thing in the same sense. Section 14 of the said Act defines free consent as consent is said to be free when it is not caused by: (1) coercion, as defined in Section 15; or (2) undue influence, as defined in Section 16; or (3) fraud, as defined in Section 17; or (4) misrepresentation, as defined in Section 18; or (5) mistake, subject to the provisions of Sections 20, 21 and 22. Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake. Sections 15 and 16 define coercion and undue influence. What follows from these statutory provisions is that an agreement to be valid should be the result of free consent apart from other requirements. While dealing with the question of duress/coercion and unequal bargaining power one is really concerned with the question of free will, i.e. did the parties enter into the agreement with a free will It is the plaintiff who has raised the question of its will being dominated by the defendants and, therefore, not being a free agent. Therefore, the plaintiff is on test. It has to be ascertained whether the plaintiff exercised a free will or not while entering into the Supplemental Agreement. For this purpose there are several factors which need to be looked into. They are

1. Did the plaintiff protest before or soon after the agreement

2. Did the plaintiff take any steps to avoid the contract

3. Did the plaintiff have an alternative course of action or remedy If so, did the plaintiff pursue or attempt to pursue the same

4. Did the plaintiff convey benefit of independent advice

30. The above questions when examined in the light of the facts on record it appears that the plaintiff never made any protest before entering into the Supplemental Agreement or even thereafter. On the contrary the plaintiff affirmed the Supplemental Agreement and went ahead with its performance. The agreement was challenged only just before it was about to expire. Thus the plaintiff took all the benefits under the agreement and chose to attack it and raises all the questions now raised in the present suit after the agreement had been allowed to run its full course. While on protest it is also worth noting that the plaintiff did not even reply to the two notices of termination served on it by the defendant. The conduct of the plaintiff in challenging the Supplemental Agreement is further to be decried for the reason that the plaintiff submits that it was not getting any great advantage under the agreement. Therefore, there was all the more reason that the plaintiff should have instead of entering into this agreement, raised its voice and sought the remedy in Court at that stage. Already there was no love lost between the parties. PFL had already served notices of termination and nothing worse could have happened. The plaintiff could have approached the Court at that stage. This also answers the second question posed above, i.e. did the coerced party take steps to avoid the contract The plaintiff on the contrary affirmed the contract and took benefit thereunder by allowing it to run its full course. The third question is also already answered because the plaintiff could have sought alternative remedy before entering into the Supplemental Agreement by going to Court. It did not do so. It rather went ahead with the agreement. After having done so the plaintiff is not entitled to challenge the agreement. If the party complaining of an unfair contract does not do anything to avoid it or accepts it then the complaining party cannot make a grievance of the contract. North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd., (1979) 1 QB 705; 1978 (3) All.ER 1170. So far as the question of independent advice at the time of entering into the Supplemental Agreement is concerned, it is to be noticed that the plaintiff has on its board of directors businessmen of long standing and experience. It has a solicitor also on its board of directors. Therefore, the plaintiffs are not laymen or novice, who do not understand the implications of what they are doing. The plaintiff thus had best of advice. It has been shown on record that the agreement was negotiated between the parties before it was finally executed. Its draft had been sent to the plaintiff inviting suggestions. The plaintiff did convey its suggestions on the draft and these documents are placed on record. The documents are not in dispute or controversy. Therefore, the clause that the agreement was to expire on 30th September, 1992 was very much in the knowledge of the plaintiff and it was conscious of it. Defendants have also placed independent material on record to show that in its dealings with third parties, i.e. independent of defendants, the plaintiff was accepting the fact that its arrangement with PFL was due to terminate on 30th September, 1992 and its factory was to close down thereafter. The plaintiff had written to this effect to the authorities under the Industrial Disputes Act. Copies of the plaintiffs letters have been placed on record.

31. Duress which is the term used in English law in this connection should be the result of the acts and conduct of the defendant and not the result of plaintiffs own necessities. From the material on record it is difficult to say that PFL exercised any duress on the plaintiff.

32. In some of the English cases it has been held that some amount of pressure in commercial transactions is always there. Kerr J. observed in Occidental Worldwide Investment Coop. v. Sky A/S Avanti, (1976) 1 Leoyds Rep. 293 at 336, in a contractual situation commercial pressure is not enough. Legitimate pressure alone will be permitted and any illegitimate pressure will vitiate the consent. Was their illegitimate pressure on the plaintiff in the present case which compelled it to enter into the Supplemental Agreement It appears that it was more out of plaintiffs own commercial necessities that the plaintiff entered into the Supplemental Agreement and the Supplemental Agreement was not the result of any legitimate pressure exercised on the plaintiff by PFL. If that was not so, the plaintiff should have challenged the threatened termination of the contract by PFL, if necessary, by going to Court. There was nothing which prevented the plaintiff from going to Court and seek its remedies against the threatened termination of the parent agreement at that stage. Therefore, it is difficult to say that the Will of the plaintiff was dominated by PFL on account of duress or unequal bargaining power. The plaintiff took a conscious decision in March, 1992 when it entered into the Supplemental Agreement. It was a conscious decision because the Supplemental Agreement was admittedly discussed and the plaintiff made its comments on the draft agreement. The Supplemental Agreement was negotiated in the background of threatened termination of the parent agreement. The notices of termination served by PFL on the plaintiff were pending. Thirdly the language o the Supplemental Agreement does not suggest any kind of pressure on any of the parties. On the contrary its language suggests absolute free will of both the parties indicating that it was a voluntary act of the parties. The agreement was arrived at in a spirit of amicable resolution of the pending issues between both the parties.

33. Williston in its Treatise on the Law of Contracts 1970 Vol. 13 has summarised the position in para 1603 as under:

Probably the most significant development affecting the doctrine of duress is the great expansion in the concept of economic or business duress during the twentieth century. A growing majority of jurisdictions subscribe to the doctrine that there are circumstances under which economic pressure may invalidate an otherwise enforceable contract. The Supreme Court of the United States has recognized and given its judicial benediction to this extension of duress. Referring to the modern doctrine of economic duress it has been aptly said: This doctrine is constantly being extended and expanded and bears slight resemblance to common-law duress.

Recognising this trend towards expansion of economic duress or business compulsion, the Court summarized the requirements:

The law of duress has broadened some what during recent years making it virtually impossible to arrive at any clear-cut definition, and the Court have stated that its application must of necessity depend upon the circumstances of each individual case. An examination of the cases, however, makes it clear that three elements are common to all situations where duress has been found to exist. These are: (1) that one side involuntarily accepted the terms of another; (2) that circumstances permitted no other alternative; and (3) that said circumstances were the result of coercive acts of the opposite party. In order to substantiate the allegation of economic duress or business compulsion, the plaintiff must go beyond the mere showing of a reluctance to accept and of financial embarrassment. There must be a showing of acts on the part of the defendant which produced these two factors. The assertion of duress must be proven to have been the result of the defendants conduct and not by the plaintiffs necessities.

34. The Contracts are meant to be performed and not to be avoided. Justice requires that men who have negotiated at arms length, be held to their bargains unless it can be shown that their consent was vitiated by fraud, mistake or duress. The real test is to first establish that the means pursued were illegitimate in the sense of amounting to or threatening a crime, tort or a breach of contract (though possible not plausible breach of contract will suffice). Secondly, one must establish that the illegitimate means were a reason, though not necessarily the pre-dominate reason for the victims submission. Applying these tests to the facts of the present case. I am unable to persuade myself to hold that the consent of the plaintiff to enter into the Supplemental Agreement was not free or was vitiated on any of the grounds urged before me and discussed hereinbefore.

35. The result of the above discussion is that the Supplemental Agreement cannot be held to be illegal or invalid, at least at this stage. As per the Supplemental Agreement the agreement dated 5th November, 1990 came to an end on 30th September, 1992. The plaintiff has prayed that the agreement dated 5th November, 1990 should be allowed to be continued through an interim injunction. I am afraid in the face of the Supplemental Agreement no such relief can be granted to the plaintiff. When the Supplemental Agreement specifically provides that by mutual consent parties have put an end to their obligations under the main agreement dated 5th November, 1990 with effect from 30th September, 1992 the prayer of the plaintiff to carry on with the agreement cannot be granted. If this prayer cannot be granted contrary to the specific agreement of the parties, the question of balance of convenience and irreparable loss and injury, pale into insignificance and need not be adverted to. The contract itself does not survive. If the Court allows the contract to operate it will mean re-writing of the contract contrary to the will of the parties expressed in the shape of the Supplemental Agreement. No relief can be granted contrary to the specific terms of the contract between the parties. Therefore, the plaintiffs applications (I.A. Nos. 12158 and 12250 of 1992) under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure are liable to be dismissed. Ordered accordingly. The parties are left to bear their respective costs.

I may add that that the above is an expression of prima facie opinion. The same will be subject to the final decision of the suit.