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22.07.2019
ss
W.P.13269(W) of 2019
M/s. Roy and Company & ors.
Vs.
Indian Oil Corporation Ltd. & ors.
Mr. Sakti Nath Mukherjee
Mr. R. A. Agarwal
Ms. Nibedita Pal
Mr. Ramesh Dhara
Mr. A. G. Mukherjee … For the petitioner
Mr. S. Yadav … For the I.O.C.L.
Mr. Susovan Sengupta
Mr. Subir Pal … For the State
1. This is an application under Article 226 of the Constitution of India
wherein the writ petitioner is aggrieved by an order dated July 9, 2019 passed by
the Chief Divisional Retail Sales Manager, Durgapur Divisional Office, Indian Oil
Corporation Ltd. (MD) wherein the authority has terminated the kerosene/light
diesel oil dealership dated 29.07.2009 between the petitioner and the Indian Oil
Corporation Ltd. (in short, I.O.C.L.),
2. The only ground for the said termination is that partnership firm that has
been reconstituted on the death of one of the three partners has not been done in
accordance with the extant policy. Clause 1.5 of the said policy dated 1st
December, 2008 is delineated below :-
“1.5. In cases of death of one of the partner(s), the partnership shall be
reconstituted with the legal heir(s) of the deceased partner(s) and surviving
partner(s). However, if there is no legal heir(s) or the legal heir(s) has expressed
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unwillingness, the dealerships/ distributorship shall be reconstituted with the
surviving partner(s).”
3. As per the above clause, on the death of a partner, the partnership firm
has to be reconstituted with the heirs of the deceased partner and the surviving
partners and/or no objection has to be taken from the heirs of the deceased
partner.
4. In the present case, all the heirs of the deceased partner except one have
given their ‘no objection’. It is to be noted that by an earlier order dated 7th
December, 2017 passed by the Division Bench of this Court, the partnership had
been directed to be continued and I.O.C.L. had been directed to supply the
kerosene oil to the partnership with liberty to I.O.C.L. to decide on the dealership
keeping in mind the observation made in the judgement.
5. Mr. Mukherjee, Senior Advocate appearing on behalf of the petitioners has
relied on a subsequent judgement with the Division Bench dated July 4, 2018 in
Indian Oil Corporation Ltd. & ors. Vs. M/s. Shree Niwas Rammgopal & ors.
(APO NO.42 of 2014 arising out of W.P.758 of 2010) wherein separate
concurrent judgements have been given by the Hon’ble Judges. Mr. Mukherjee
relied on the observation of Justice I.P. Mukherjee that are delineated below :-
“In this case also, the appellant being a statutory corporation, ought to act
without arbitrariness, with fairness, reasonableness and in a just and equitable
way. In doing it should not insist in enforcing the subject clause in the dealership
agreement. It should waive it, considering the fact that the respondents have
been doing business with the appellant for a long time, uninterruptedly and
without any complaint. It should not act with the ruthlessness of a party to a
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contract in the private law domain. This court cannot declare the termination of
the dealership as illegal.”
6. Mr. Yadav, Counsel appearing on behalf of the I.O.C.L. submits that the
Division Bench has not struck down the clause in the policy, and accordingly,
they are bound to follow the same. He further submits that the dealership
agreement has an arbitration clause, and accordingly, the parties should pursue
their remedies in arbitration and not invoke the extraordinary jurisdiction under
Article 226 of the Constitution of India.
7. Mr. Sengupta, Counsel appearing on behalf of the State also reiterated the
submission made by the Counsel on behalf of the I.O.C.L. and stated that since
termination has been effected on 13th July, 2019, the State cannot permit the
petitioner for selling the kerosene oil.
8. I have considered the submissions made on behalf of the Counsel
appearing for the parties and perused the materials on record. I am of the view
that I am bound by the Division Bench judgement in M/s. Shree Niwas
Rammgopal (supra) wherein the Division Bench has observed that the I.O.C.L.
being a statutory corporation ought to act without arbitrariness. It has also
stated that the I.O.C.L. should not insist in enforcing the subject-clause in the
dealership agreement. It should waive it, considering the fact that the
respondents have been doing business with the appellant for a long time,
uninterruptedly and without any complaint. The factual matrix in the present
case is pari materia with the case of M/s. Shree Niwas Rammgopal (supra), and
therefore, the ratio therein shall apply in the present case. In view of the same,
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being bound by the Division Bench judgement, I am of the view that the
impugned termination order is arbitrary and against principles established in
law. In a catena of judgements it has been held that even in contractual
agreements entered into by a public corporation with a private body, if there is a
touch of arbitrariness, the alternative remedy of arbitration is not a bar and it is
the duty of the writ court to interfere in such matters of arbitrariness.
9. In light of the same, I quash and set aside the letter dated July 9, 2019.
The I.O.C.L. is directed to continue to supply of kerosene oil and allied products
to the petitioners as per the earlier dealership agreement that was in existence
forthwith preferably within a period of two days from date. The State authorities
shall also act in accordance with the order and grant licence to the petitioners
under West Bengal Kerosene Control Order, 1968 in accordance with law.
10. With the above observation, this writ petition is disposed of.
11. Since no affidavit is called for, all allegations made in the writ petition are
deemed not to have been admitted.
12. Urgent photostat certified copy of this order, if applied for, shall be given
to the parties on usual undertaking on compliance of all formalities.
(Shekhar B. Saraf, J.)
