Stay order for distribution of FMCG products (HUL) in Hunsur town
I have been the Re-distribution stockiest for Hunsur and rendering distribution service since 26 years. All of sudden the company unilaterally oppointed another distributor and supplied the goods to him. as per the company's direction I have given market credit, and holding stocks in my godown. Since, i am the authorised distributor they need to take NOC for Appointing another RS for the same area. Without giving any notice and in the absence of financial problems they have did this unreasonably. All my payments and dues are cleared by me I do not owe anything to the company. This is a major problem of this HUL in India and they with their power the ask the RS to sign an unilateral agreement in which all clauses are in their favour only. Hence, a stay order is required to stop their supply to retailers by the new stockiest. If required I can send you the scaned copy of the agreement.
Asked 4 months ago in Business Law from Hunsur, Karnataka
1) it is necessary to peruse agreement signed by you with the company .
2) in addition correspondence exchanged by you with the company has to be perused for advise
3) it is better you contact a local lawyer and based on his advice move court for necessary reliefs
You have to first go through the agreement and conditions for appointment of stockist/distributor and find if there is any restriction clause agaisnt the company.
If you are sure that the company has violated its own condition you may file an injunction suit agaisnt the company in this regard seeking to restrain it from appointing any other stockist till the termination of yor present agreement with the company
By the way hen is the contract getting terminated, is it yearly renewable or how?
Holding the contract for a long term will not bestow lifetime interest in the company's contractual agreement with you,
The company may decide to change its policy anytime and it is not bound to your dictates.
Therefore consult a local company/civil law practicing lawyer, discuss all the issues properly before you would like to initiate any legal action against the company.
You should aproach the court with asuit for damages and seek a stay order for them dealing with a another party.
The company has violated norms ,so you have a good case to sue them ,you should.also seek for the reinstate the contract terms as the company is bound by the specific performance of the contract ,so you have the option to sue them for breach of contract.
Engage a lawyer from th e area where the jurisdiction prescribed in the company contact and proceed legally against then in the court.
You can file a suit for declaration of the appointment of another distributor as illegal and also seek injunction to restrain the new appointee from acting in pursuance of his appointment during the pendency of the suit if the contract demands that your NOC is mandatory before another distributor may be appointed. The civil court can declare the appointment as illegal.
Getting a stay order is not a problem at all as you have been in the distribution business for last 26 years and also that HUL has not taken any NOC from you before appointing another RS.
However need to check your Re-distribution stockist agreement to understand at length the following
a) Provisions preventing the principal from appointing other agents in respect of a given type of transaction, customer or territory with reference to Sec 3(a) of Competition Act and also Indian Contract Act.
b) Also need to identify clauses in agreement that demonstrate
1) Abuse of Dominance by HUL in appointing another RS in your territory
2) Collate grounds/rationale for "Rule of Reason test" in your favour
1. You can file a damage suit for their appointing another RS in your area for which your payment have been stopped by your retailers, claiming payment of your dues in the market with interest, damage and cost,
2. You can also file a petition before the Court praying for a stay order restraining HUL in appointing another RS till your outstanding are received by you,
3. In the above damage suit, you shall have to take the stand that HUL was and also is in a dominating position for which they have illegally managed to get the one sided agreement signed by you which goes against your business interest.