Tvb Marketing India Pvt Ltd v. Itc Ltd

RAJIV SAHAI ENDLAW, J. JULY 31, 2019 "gsr" (corrected and released on 5th October, 2019)

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 31st July, 2019 + CS(OS) 653/2015 TVB MARKETING INDIA PVT LTD ..... Plaintiff Through: Mr. Rajshekhar Rao, Mr. Varun Mishra & Mr. Karthik Sundar, Advs. Versus ITC LTD ..... Defendant Through: Mr. Anil Airi, Sr. Adv. with Mr. L.K. Bhushan & Ms. Sukanya, Advs. CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. The plaintiff has sued the defendant, for (i) declaration that the defendant is in breach of the Marketing Agreement dated 29th August, 2011 and the plaintiff is entitled to damages for the loss suffered on account of breach, and, (ii) recovery of damages in the sum of Rs.2,00,00,100/- with pendente lite and future interest, pleading that (a) the parties entered into a Marketing Agreement dated 20th September, 1994 whereunder the defendant appointed the plaintiff as its exclusive marketing representative for its membership programme "Welcom Group Sheraton Plus", for a maximum period of 24 weeks or until 4,000 memberships were sold, whichsoever was earlier; (b) satisfied with the marketing skills of the plaintiff, the defendant renewed the arrangement with the plaintiff, with similar agreements, from time to time; (c) the parties entered into a Marketing Agreement dated 29th August, 2011 whereunder the plaintiff was to market and sell the Culinary Plus Membership Programme (including distribution of membership cards) and authorize certain discounts and benefits at defendant"s hotels etc.; (d) the plaintiff, under the said Marketing Agreement, marketed the Culinary Plus Membership programme of the defendant, selling the primary and spouse memberships to seven hotels of the defendant and each of which entitled its members to discounts at the restaurants, rooms and other value added vouchers and benefits at the defendant"s hotels; (e) it was agreed, that the defendant shall pay the plaintiff a fixed fee of 42% of membership fee, less taxes; (f) the plaintiff, to fulfil its obligations under the said Marketing Agreement, made substantial investments towards renting office space, computers, training of employees, software and maintaining database of members, telephones etc.; (g) suddenly on 30th April, 2013, which was eleven months prior to the expiry of the aforesaid Marketing Agreement, the plaintiff received an e-mail from the defendant, not to carry out any fresh member enrolments to the Culinary Plus Programme or renew any membership and requesting the plaintiff, "to continue to conduct the Program in accordance with the terms of the Agreement for the members currently having a valid Culinary Plus membership card…"; (h) the plaintiff, immediately on receiving such unilateral instructions from the defendant, notified the defendant of how, stopping the sales of membership and / or renewals, would financially impact the plaintiff and its employees; (i) the defendant made multiple assurances to the plaintiff, that the plaintiff"s grievances would be met; (j) however, to the shock and surprise of the plaintiff, the defendant, vide its letter dated 27th December, 2013, terminated the Marketing Agreement with the plaintiff with effect from 1st April, 2014; (k) the plaintiff"s revenue was dependent on enrolment of new memberships and the same formed the substratum of the contract between the parties; (l) the defendant, by unilateral direction to the plaintiff to discontinue enrolment of new memberships, committed a breach of the contract with the plaintiff and though the plaintiff was entitled to discontinue its services and terminate the Marketing Agreement, but restrained from doing so on account of past long association with the defendant and assurances even then meted out by the defendant to the plaintiff; and, (m) the plaintiff is entitled to a decree of damages of Rs.2,00,00,100/- on account of expenses incurred by it on behalf of defendant and towards loss of earning due to illegal unilateral discontinuation of the Marketing Agreement by the defendant. 2. The suit w