High Court
Case Details
WA 271/2007 BEFORE HON’BLE THE CHIEF JUSTICE MR. A.K. GOEL HON’BLE MR. JUSTICE A.K. GOSWAMI This appeal has been preferred against order of learned Single Judge qua shing termination of retail outlet given to the respondent for alleged irregular ities.
Decision
The appellant Corporation allotted a retail outlet for sale of petroleum products to the writ petitioner-respondent vide agreement dated 19.11.1997. Vid e letter dated 28.7.2006, the appellant alleged that the writ petitioner was tam pering with the weight and measure seal of HSD (High Spirit Diesel) dispensing u nit, free air facility was not available, MS (Motor Spirit) product and HSD prod uct were found dry on certain days. The allegations were made on the basis of su rprise inspection report by the Executive Sales Officer of the appellant. The wr it petitioner denied the allegations but the appellant passed the impugned order dated 16.10.2006 terminating the dealership agreement. Aggrieved thereby, the writ petitioner-respondent approached this Court under Article 226 of the Constitution with the plea that due opportunity of hear ing was not given and the impugned order was arbitrary and, thus, violative of A rticle 14 of the Constitution. Considering the rival versions, the learned Single Judge upheld the stan d of the writ petitioner as follows : In the instant case, what is found is that there has been gross violat (cid:28)18. ion of the principles of natural justice. The petitioner was never apprised of contemplation on the part of the respondent-Corporation that if no satisfactory explanation was furnished, the dealership would be liable to be terminated. The communication dated 28.7.2006 never indicated that the same was a step towar ds taking the impugned decision. Independent of the communication dated 28.7.200 6, the petitioner ought to have been apprised of the contemplation of the respo ndent-Corporation to terminate the agreement with the petitioner by furnishing appropriate materials. However, the same was not done. After the petitioner f urnished his explanation as was asked for, the respondent-Corporation terminate d the contract agreement without affording any opportunity of being heard to the petitioner. Thus, there being gross violation of principles of natural justic e, I am of the considered opinion that the writ petition is maintainable even if there is alternative remedy open to the petitioner. Further, the writ petitio n having been admitted for hearing without any reservation, the rules of alterna tive remedy may not operate as absolute bar towards deciding the same on merit. In the impugned order, the respondent-Corporation has attributed malpra 19. ctices on the part of the petitioner, but there is no indication as such in the earlier communication dated 28.7.2006. The respondent-Corporation simply asked for the explanation referring to the inspection report and it was never indicat ed that the same was a step towards termination of the agreement. Had there bee n any indication in the communication dated 28.7.2006, the petitioner would hav e been entitled to further opportunity to deal with the allegations. Thus, the impugned order is not sustainable solely on the ground of violation of principle s of natural justice. 20. As per Clause 55 of the contract agreement, the Corporation shall be at liberty to terminate the agreement if the dealer shall commit breach of any of t he covenants and stipulations contained in the agreement, and failed to remedy such breach within 4 days of the receipt of the written notice from the Corporat ion in that regard. In the instant case, not to speak of asking the petitioner to remedy the defects, by issuing notice, within the stipulated period, the pe titioner was not even informed that the communication dated 28.7.2006 was in fac t in the form of a show cause notice towards termination of the contract agreeme nt. It is only in the affidavit-in-opposition, the respondent-Corporation has d escribed the same as the show cause notice, but on a bare perusal of the same, it cannot be said to be a show cause notice. The alleged irregularities were only pointed out by the said communication asking the petitioner to furnish his explanation which the petitioner did. However, the respondent-Corporation issue d the impugned order dated 16.10.2006 without discussing anything about the ex planation furnished by the petitioner. It has been alleged in the impugned order that there was violation of agreement clauses as indicated therein. If that be so, as per the requirements of Clause 55, the petitioner ought to have been as ked to remedy the breach of the clauses within the stipulated period, but not to speak of providing such opportunity, the petitioner was not even intimated tha t the letter dated 28.7.2006 was in the form of a show cause notice towards term ination of the contract agreement with the petitioner. 21. The petitioner by his reply furnished the required explanation and the explanation so furnished, is a plausible one. The termination of the contract w as a serious step. By such termination, the retail outlet in existence since 19 62 has been brought to an end. It is true that a fresh agreement was executed b y and between the petitioner and the respondent-Corporation but the fresh agree ment was also in operation for the last 9 years. Before taking the serious ste p for terminating the same, the respondent-Corporation ought to have provided th e petitioner with reasonable opportunity of being heard. However, not to speak o f such opportunity being provided to the petitioner, he was not even put to not ice that there was contemplation of the Corporation for termination of the contr act agreement. The explanation furnished by the petitioner and categorical sta tements in the writ petition, have not been so denied by the respondents in thei r counter affidavit. 22. For all the foregoing reasons and discussions, I am of the considered op inion that the petitioner has been able to make out a case for interference und er Article 226 of the Constitution of India in respect of the impugned order dat ed 16.10.2006. Consequently, the writ petition is allowed by setting aside and quashing the impugned order dated 16.10.2006. The petitioner shall be allowed to run the retail outlet namely, M/S Bani Service Station. However, it is made cl ear that the petitioner shall fulfill all the requirements for running the reta il outlet. (cid:29) Only contention which has been put forward by learned counsel for the ap pellants is that in case the order was vitiated by principles of natural justice , the appellant should be permitted to look into the matter in accordance with l aw, after complying with the principles of natural justice. Learned counsel for the writ petitioner-respondent supported the order o f learned Single Judge. After due consideration, we find that since the finding recorded by lear ned Single Judge that the order passed by the appellants was in violation of the principles of natural justice is not shown to be erroneous, there is no ground to interfere with the order of the learned Single Judge quashing the order of ca ncellation of retail outlet but without prejudice to any fresh order being passe d in accordance with law. Since there has been stay of order of learned Single J udge for the last about six years in favour of the appellant, the stay order wil l remain operative for a period of two months. During this period, the appellant s will be at liberty to pass a fresh order having regard to the facts and circum stances, after giving due opportunity to the writ petitioner of being heard in t he matter. If no fresh order is passed, order of learned Single Judge will becom e enforceable on expiry of the said period. The appeal stands disposed of accordingly.