Pure Drinks Seeks Stay Against Schweppes

The tussle between Pure Drinks and Cadbury Schweppes has taken a new turn with the former moving the High Court for an injunction restraining Cadburys from limiting the territory of Pure Drinks.

The application filed by Satwant Singh as the chairman of Pure Drinks (New Delhi) has challenged the multinational companys decision to limit the area of Pure Drinks to distribute Cadburys soft drinks in Delhi with effect from January 1, 1997.

Schweppes in its reply to the court has produced a letter from Ajit Singh, estranged brother of Satwant Singh and a director in Pure Drinks (New Delhi), stating he has reluctantly accepted the recast of the territory.

 

Satwant Singhs petition, on the other hand, claimed that Ajit Singhs agreement with Cadbury to stop Campa Orange and phase out Campa Lemon was unauthorised and can not bind Pure Drinks.

In his application, Satwant Singh alleged that Cadbury has failed to play large sums of money payable to Pure Drinks and are interfering and obstructing with the business operations of the company so as to weaken its organisation and expose it to takeover.

He also sought injunction orders restraining Schweppes from distributing Crush, Canada Dry, Schweppes Lemonade, Campa Cola, Campa Orange and Campa Lemon either directly or indirectly in the exclusive territory of Pure Drinks.

However, Cadbury Schweppes has contested the authority of Satwant Singh to file the petition on behalf of Pure Drinks claiming that he was not the chairman of Pure Drinks.

The relationship has reached a point where it is difficult to continue to function in a manner which would be conducive to the commercial interest of both Pure Drinks and Cadbury Schweppes, the petition said. Pure Drinks and Cadbury had entered into an agreement in November 1994, by which Pure Drinks was given exclusive rights to manufacture and sell Crush, Canada Dry, Schweppes Generae, Schweppes bitter lemon and Schweppes tonic water in Delhi, Haryana (except Ambla and Kurukshetra) and Ghaiabad.

Satwant Singh has alleged that Cadbury breached the agreement by instigating a number of other parties to sell and market crush and Canada Dry in its territory, thereby seriously affecting sales performance and revenue of Pure Drinks.

He also alleged that Cadburys had given Pure Drinks a oral commitment for promotion and development of Cadbury brands both led by Pure Drinks and not to introduce a cola in its territory.

Satwant Singh said the communication from Cadbury limiting Pure Drinks territory does not satisfy the conditions requisite for invocation of the clause 6 of the agreement and therefore it had no right or authority to withdraw any part of the territory from Pure Drinks.