In a significant legal victory for automobile dealers, the Radha Group, a prominent Toyota dealership, has successfully won an arbitration case against Toyota Kirloskar Motor (TKM). The arbitrator ruled that TKM's abrupt termination of the dealership agreement was illegal and constituted a breach of contract.
A Long Legal Battle Culminates in Victory
The dispute began when Toyota Kirloskar Motor terminated its dealership agreement with Radha Group on June 1, 2022. The Radha Group immediately challenged this decision by filing a civil suit. The legal journey saw multiple rounds of litigation, progressing all the way to the Supreme Court of India.
Initially, a Ramnagara court in October 2022 declared TKM's action as a breach of contract. This decision was later upheld by the Karnataka High Court. Following this, TKM approached the Supreme Court, appealing against the high court's order. The apex court then suggested that the dispute be settled through arbitration.
The Arbitration Award and Its Details
In January 2026, the Supreme Court appointed Justice R V Ravindran, a former judge of the Supreme Court, as the sole arbitrator for the case. After reviewing the matter, Justice Ravindran passed an award in favor of the Radha Group.
The arbitrator invalidated the termination of the dealership agreement. Furthermore, he granted Radha Group damages for the 90-day notice period. The award also includes an 18% interest on the damages and costs. In a notable move, Justice Ravindran also dismissed TKM's counterclaims, which were totalling over ₹200 crore.
Reaction and Implications
Expressing relief and satisfaction with the outcome, M V Srinivas, director of Radha Group, stated that the award is a testament to their commitment and fairness. He added that the wrongful termination was declared invalid and damages were allowed partly.
This case highlights the critical importance of contractual obligations in the automotive distribution sector. The ruling reinforces the legal protections available to dealers against abrupt and unjust termination by automobile manufacturers. The arbitration award sets a notable precedent for similar disputes in the industry, emphasizing due process and the terms agreed upon in dealership agreements.
