The Honourable Mr v. Sree Venkateswara Service Station,A regd. Firm

In the High Court of Judicature at MadrasDated: 11 - 12 - 2007Coram:The Honourable Mr.Justice S.J.MukhopadhayaandThe Honourable Mr.Justice M.VenugopalO.S.A.Nos.67 and 68 of 2001 and 132 to 136 of 2003 and W.A.Nos.2002 and 2005 of 20031. Bharat Pertoleum Corporation Ltd., Rep. by its Territory Manager, 35, Vaidyanatha Mudali Street, Tondiarpet, Madras-600 081.2. Bharat Petroleum Corporation Ltd., Rep. by its Chief Divisional Manager, 1, Ranganathan Garden, Anna Nagar, Madras-600 040.. Appellants in O.S.A.No.67 of 2001 and 68/2001, Respondents in OSA No.132 to 136/2003, Appellants in WA No.2002/2003, Respondents in WA No.2005/2003vs.Sree Venkateswara Service Station,A regd. Firm, rep. by its Managing Partner,Sri K.G.Loganathan,265/1, CP Manali Express Highway,Sathanagadu, Manali, Madras-600 068 .. Respondent in O.S.A.No.67 of 2001 and 68/01, Appellant in OSA No.132 to 136/2003, Respondent in WA No.2002/2003,Appellant in WANo.2005/03Original Side Appeal No.67 of 2001 and 68/2001 filed againstthe order dated 15.12.2000, passed in Original Application No.1083of 2000 and 1081/2000 in Civil Suit No.880 of 2000 and 881 of 2000on the file of the Original Side of this Court.OSA No.132 to 136 of 2003 : Original Side Appeal No.132 to 136 of2003 filed against the order dt.28.3.2003,passed in OriginalApplication No.701/02,702/02,4205/02,4206/02,4720/02 in Civil Suit https://hcservices.ecourts.gov.in/hcservices/ No.703/2002, on the file of Original Side of this Court.WA No.2002 of 2003 and WA No.2005 of 2003 : WA filed against theorder of this Court dt. 6.5.2003 and made in WP 13754/03 WritPetition filed under Article 226 of the constitution of Indiapraying to issue a writ of Certiorarified Mandamus calling for therecords of the respondents viz. the order of termination of dealership dt. 29.3.2003 issued vide.Ref.M.41-07 issued by the 1strespondent and quash the same and direct resumption of sales andsupplies of the petroleum products to the petitioner's outlet atNo.403/B Tiruvotriyur High Road, Chennai 600 019 in accordance withlaw dealer ship agreement dt. 9.4.1981 and 5.7.1984. For appellants in O.S.A.No.67 of 2001 and 68 & WA 2002/03 & Respondent in OSA 132 to 136/2003 and WA 2005/03: Mr.O.R.SanthanakrishnanFor respondent in O.S.A.No.67 of 2001 and 68 of 2001 & WA 2002/03 and for Appellant in OSA 132 to 136/03 and WA 2005/03: Mr.R.ThiagarajanCommon JudgmentS.J.Mukhopadhaya,JIn all these appeals, as there are common parties and almostsimilar questions are involved, they were heard together anddisposed of by this common judgment.2. Sree Venkateswara Service Station (hereinafter referred toas 'the dealer') entered into an agreement for dealership withBharat Petroleum Corporation Limited (hereinafter referred to as'the Petroleum Corporation') for two retail outlets, one atThiruvottiyur, Chennai and the other at Sathangadu, Manali, Chennai.Having served with show cause notice and order of suspension, thedealer preferred three suits in C.S.Nos.880 and 881 of 2000 and 703of 2002. 3. Original Applications in O.A.Nos.1080 and 1081 of 2000 inC.S.No.881 of 2000 and Original Applications in O.A.Nos.1082 and1083 of 2000 in C.S.No.880 of 2000 were filed by the dealer, forgrant of interim injunction. Separate applications were alsopreferred by the dealer in O.A.Nos.701 and 702 of 2002 andApplication Nos.4205, 4206 and 4720 of 2002, in C.S.No.703 of 2002,for certain other reliefs, such as conducting test and forsubmitting report and to allow the plaintiff (dealer) to effect saleof petroleum products etc. https://hcservices.ecourts.gov.in/hcservices/

4. Learned single Judge, by the common impugned order dated15.12.2000 in O.A.Nos.1080 to 1083 of 2000, passed the interim orderwith the following conditions:"23. For the reasons stated above, thedefendants are directed to supply petroleumproducts to the plaintiff in both cases subjectto the following conditions:(i) The plaintiffs are directed to removethe petroleum products stored in the undergroundtanks and make them suitable for receiving thenew petroleum products from the defendants.(ii) The plaintiffs are directed to make thenecessary payments before getting supply of thepetroleum products.(iii) The plaintiffs should file anaffidavit of undertaking before this Court thatthey would sell the petroleum products in thecondition in which it was received by them andthey would not indulge in any other illegalacts.(iv) The defendants are restrained fromcancelling the dealership of the plaintiffs tillthe disposal of the suit, but, however, thiswill not be a bar if and when the plaintiff infuture violates the terms and conditions of theagreement.These applications are ordered accordingly."5. The aforesaid common order dated 15.12.2000 is underchallenge in O.S.A.No.Nos.67 and 68 of 2001 preferred by thePetroleum Corporation. 6. So far as the other applications in O.A.Nos.701 and 702 of2002 and Application Nos.4205, 4206 and 4720 of 2002, are concerned,the learned single Judge rejected the same by common order dated28.3.2003, against which, the dealer has preferred O.S.A.No.132 to136 of 2003.7. During the pendency of the above said three suits, thePetroleum Corporation, vide order dated 29.3.2003, terminated theaforesaid dealership so far as the petroleum outlet at No.403,Thiruvottiyur High Road, Thiruvottiyur, Chennai-19, is concerned,and the said order dated 29.3.2003 was challenged by the dealer inWrit Petition—W.P.No.13754 of 2003. On receipt of notice in the saidWrit Petition, the Petroleum Corporation appeared and brought to thenotice of the learned single Judge that only after giving notice tothe dealer and taking into consideration the show cause replysubmitted by it, the dealership has been terminated in terms of the https://hcservices.ecourts.gov.in/hcservices/ agreement. The learned single Judge, by order dated 6.5.2003, thoughnoticed that different applications were made in the show causenotice by the Petroleum Corporation against the dealership, setaside the order of termination of dealership dated 29.3.2003 on theground that no reasons have been given in the order of terminationof dealership and remitted the matter, providing stop-gaparrangement. Liberty was given to the Petroleum Corporation toenquire into the matter and pass fresh order, but it was observedthat in the meanwhile, the Petroleum Corporation can carry onbusiness by themselves without giving it to any other person ordealer, pending final orders to be passed by the PetroleumCorporation. The order dated 6.5.2003 passed by the learned singleJudge has been challenged both by the Petroleum Corporation in WritAppeal No.2002 of 2003 and by the dealer in Writ Appeal No.2005 of2003.8. When the above appeals were taken up by this Court forhearing, prima-facie it appeared that most of the O.S.As. havebecome infructuous and we have heard the Writ Appeals in detail,apart from the arguments advanced in respect of the interim orders. 9. So far as the Petroleum outlet at Sathangadu, Manali,Chennai is concerned, learned counsel for the Petroleum Corporationsubmitted that ad-hoc dealership agreement was made, which has cometo an end by efflux of time, in view of such agreement. This was notdisputed by the learned counsel for the dealer.10. In view of the fact that the dealership agreement has nowcome to an end by efflux of time and the agreement is no more inforce, we are not deliberating on the issue raised in O.S.A.No.67 of2001, which became infructuous. 11. The first three conditions stipulated by the learned singleJudge in the interim order dated 15.12.2000 are applicable only tothe plaintiff (dealer) and the fourth condition that has beenstipulated to the defendant (Petroleum Corporation) is not requiredto be implemented, as the dealership has come to an end, in theabsence of any extension of agreement.12. So far as the Writ Appeals are concerned, the followingfacts emerge from the pleadings made by the parties.13. In respect of Petroleum outlet at Thiruvottiyur High Road,Thiruvottiyur, Chennai, is concerned, the dealership was suspendedon 4.11.2000 on certain irregularities alleged to have beencommitted by the dealer. A notice was issued by the PetroleumCorporation on 15.11.2000 asking the dealer to show cause as to whyhis dealership agreement be not terminated. The dealer filed suitsin C.S.No.880 and 881 of 2000 and obtained interim order dated https://hcservices.ecourts.gov.in/hcservices/

15.12.2000 in O.A.Nos.1080 to 1083 of 2000. Against the said orderdated 15.12.2000, O.S.A.Nos.67 and 68 of 2001 have been preferred.14. Subsequently, during inspection of the said retail outleton 15.11.2001, certain irregularities have been noticed and anexplanation was sought for by the Petroleum Corporation by letterdated 19.11.2001. The dealer submitted reply, vide its letter dated26.11.2001. Subsequently, on 12.9.2002, a surprise check was made byCivil Supplies CID of the State Government and the Proprietor's sonwas caught red-handed, while unloading white kerosene into theunderground tank and so, the son of the dealer was arrested andlorry was seized. On that basis, the order was passed by thePetroleum Corporation on 12.9.2002 to stop the sales, followed by ashow cause notice issued on 26.9.2002 calling upon the dealer togive reply as to why his dealership agreement be not terminated.This time, the dealer submitted reply on 5.10.2002. But being notsatisfied, the impugned order of termination of dealership agreementwas issued, vide letter dated 29.3.2003.15. The learned single Judge, though noticed the aforesaidfacts, allowed the Writ Petition and set aside the order oftermination of dealership, dated 29.3.2003 with the followingobservations:"14. ... Though explanation is called for byissuing the show cause notice, from the petitioner andexplanation was offered by the petitioner denying theallegations, the respondents have not given any reasonfor not accepting the explanation offered by thepetitioner. In this case, the first respondent hasstated as follows:-"We had vide our letter dated 26.09.2002 sought yourexplanation for the above facts. Your reply dated05.10.2002 is not satisfactory". Except the above passage, the other portion of theimpugned order is nothing but reproduction of the showcause notice. The above said facts clearly show thenon-application of mind of the first respondent.Calling for explanation is not an empty formality andso the respondents should have dealt with the saidexplanation while passing the impugned order. Thereis necessity for giving reasons in view of theexpanding law of judicial review to enable thecitizens to discover the reasoning behind thedecision. Right to reason is an indispensable part ofa sound system of judicial review. Even anadministrative decision is subject to judicial review https://hcservices.ecourts.gov.in/hcservices/ if it affects the right of citizens, and it istherefore desirable that reasons should be stated. Inthe present case, the same has not been done, and merereproduction of the reasons mentioned in the showcause notice in the impugned order cannot cure thedefects as the 1st respondent has not taken anydecision and passed orders giving reasons on the basisof the reply given by the petitioner." 16. While learned counsel for the Petroleum Corporationreferred to the impugned order of termination of dealership dated29.3.2003 and submitted that sufficient reason was shown fortermination of dealership, the learned counsel appearing on behalfof the dealer referred to the said order of termination andsubmitted that no ground has been given to show why they were notsatisfied with the reply. He also placed reliance on the show causereply submitted by the dealer. Both the counsel also highlighted therelevant facts in support of their respective claim and counterclaim to find out that the irregularities were actually committed ornot, but we are not inclined to deliberate on those factual aspectsin the absence of specific evidence which can be looked into by theCourt of competent jurisdiction. 17. So far as the Writ Appeals are concerned, we are supposedto look into the question of legality or propriety of the order andat best, can look into the question whether the principles or rulesof natural justice were violated by the Petroleum Corporation inletter and spirit while terminating the dealership.18. From the show cause notice, it would be evident that thePetroleum Corporation alleged malpractice against the dealer. Showcause notices were issued on 15.11.2000, which is the subject matterin the suit C.S.No.881 of 2000. Subsequently, during the pendency ofthe suit, inspection of retail outlet was made by the officers ofthe Petroleum Corporation on 15.11.2001 and following irregularitieswere found:i. RO kept dry of products/low stocks.ii. Variation beyond permissible limits on HSD.19. The reply to the explanation was found to be totallyunsatisfactory. Subsequently, on 12.9.2002, a surprise check wasmade by the Civil Supplies CID of the State and the son of thedealer was caught red-handed while unloading white kerosene into theunderground tank for which he was arrested and lorry was seized. Onthe said date, i.e. 12.9.2002, HSD samples were taken from theoutlet, but they failed to meet the requirements of "ultra highspeed diesel" with respect to density, viscosity and sulphur. https://hcservices.ecourts.gov.in/hcservices/ Earlier, in many number of occasions, it was found that cheques weregiven by the dealer, but they were returned by the bankers andnumber of times the cheques also bounced.20. It is in the abovesaid background, subsequently, a showcause notice was issued on 26.9.2002 and the dealer was asked toshow cause as to why his dealership agreement be not terminated.Having found the reply dated 5.10.2002 unsatisfactory, the order oftermination of dealership agreement was issued.21. From the show cause reply submitted by the dealer, dated5.10.2002, we find that no specific reply had been given with regardto seizure of white kerosene tanker from the said outlet. On theother hand, such a fact has been admitted, but its reply that thematter is subjudice before the Magistrate. 22. We have noticed that what is subjudice is the imputation asalleged against the son of the dealer, but the fact relating tomixing of white kerosene with the petroleum products, has not beendisputed. Nowhere, it is disputed that the cheques issued by thedealer were returned by the banker for about two or three occasions,and even the cheques bounced. 23. Thus, action of the dealer was against Clause 10(g) and 11(b) of the DPSL Agreement, dated 5.7.1984 as alleged by thePetroleum Corporation. This fact has been noticed by the PetroleumCorporation in the impugned order of termination of dealership,dated 29.3.2003. The relevant portion is extracted hereunder:"From the above it is clear that:a. MS sample taken from your outlet on31.10.2000 failed to meet its specificationswith respect to RON.b. HSD sample taken from your outlet on31.10.2000 failed to meet its specificationswith respect to viscosity.c. HSD sample taken from your outlet on12.09.2002 failed to meet the requirements ofUltra High Speed Diesel with respect to density,viscosity and sulphur.Thus you have violated clause 10(g) of the DPSLagreement dated 05.07.1984.d. As many as five occasions, the cheques givenby you were returned by your bankers for variousreasons. https://hcservices.ecourts.gov.in/hcservices/ This is clear violation of Clause 11(b) of DPSLagreement dated 05.07.1984. e. During the joint inspection carried out atyour retail outlet on 31.10.2000, it was foundthat 1. BPCL's seals on the totaliser weretampered and 2. Weights and Measures seals ontotaliser in 'Z' line pump was missing.This is violation of Clause 9 of DPSL agreementdated 05.07.1984.We had vide our letter dated 26.09.2002 soughtyour explanation for the above facts. Your replydated 05.10.2002 is not satisfactory.Please refer to the various applications andCivil Court suit filed in the Madras High Courton the subject matter viz. O.A.No.701 & 702of 2002. Application No.4205, 4206 & 4720 of2002 in CS.703 of 2002 have been dismissedby the Lordship Justice A.Ramamurthy of MadrasHigh Court on 28.03.2003.In view of the above, you have contravened theterms of the agreement entered with us onseveral occasions particularly adulteration ofMS once and HSD twice.On close scrutiny of the history of yourdealership, we regret to inform you that we areunable to continue with your Dealership anylonger.We hereby terminate aforesaid DealershipAgreement dated 05.07.1984 forthwith." 24. From the aforesaid quotation, it would be evident that thePetroleum Corporation has not only applied their mind, but haveshown detailed grounds for termination of dealership agreement inthe impugned order dated 29.3.2003 itself. 25. In the case of Indian Oil Corporation Limited and anothervs. M/s.Kamala Filling Station (unreported) vide judgment dated26.3.2007 in Writ Appeal No.2868 of 2003, a Division Bench of thisCourt, while noticing similar submission that the detailed groundshad not been given in the order impugned, made the followingobservations: https://hcservices.ecourts.gov.in/hcservices/

15. Now, let us consider whether the orderof termination contains any acceptable reason,to be interfered with on the ground of "bereftof details". Before considering the said issue,it is to be noted that the authority like, IndianOil Corporation cannot be equated with ajudicial forum requiring to deal with all thepleadings of the parties, contentions/argumentsand to give reasons for each and every issue.In the case on hand, admittedly, the petitionerwas given an opportunity by issuing show-causenotice and in fact, pursuant to the same, thepetitioner submitted a reply on 4.6.2002. In thefirst paragraph of the termination order, theChief Divisional Manager, Indian Oil Corporationreferred to the show-cause notice dated 21.5.2002and reply of the petitioner dated 4.6.2002 andafter carefully considering the contentions foundin the reply, arrived at a conclusion that theexplanation is not satisfactory. Though theOfficer has not adverted to those detailsmentioned in the show-cause notice and the reply,it cannot be construed that the authority has notconsidered all the details/information furnishedor adverted to. It is relevant to mention thatthe authority has also referred all theirregularities committed by the dealer on threeearlier occasions. Those details show the dateand different nature of irregularities as well asthe action taken by IOC. It is not in disputethat in all three occasions, the dealer has notchallenged the action taken/punishment imposedon him. " 26. It was also observed in the above said unreported judgmentdated 26.3.2007 in Writ Appeal No.2868 of 2003, that the Indian OilCorporation being a Corporate Sector cannot permit anyone to bringdisrepute to the name and goodwill of the Corporation and affect theinterests of the general public and the Corporation cannot be asilent spectator and on the other hand, it is the duty of theCorporation to correct the situation and dealer in order to servethe general public, which is expected of by them.27. We are unable to agree with the finding of the learnedsingle Judge in W.P.No.13754 of 2003, dated 6.5.2003, that thetermination of dealership agreement was passed without givingsufficient grounds. On the other hand, we find and hold that theorder of termination was issued after giving adequate opportunity of https://hcservices.ecourts.gov.in/hcservices/ hearing the dealer and after considering the merits of the reply, asthere is application of mind, having shown sufficient grounds forthe same. We accordingly set aside the order dated 6.5.2003 passedby the learned single Judge in W.P.No.13754 of 2003.28. In view of the fact that the dealership of the dealer nowhas been terminated, vide order dated 29.3.2003, as upheld by us, weare of the opinion that all interim orders passed by the trial Courtand challenged in O.S.A.Nos.67 and 68 of 2001 and O.S.A.Nos.132 to136 of 2003, now cannot be given effect to. Thus, those appeals havebecome infructuous.29. We accordingly allow Writ Appeal No.2002 of 2003 preferredby the Petroleum Corporation and dismiss the Writ Petition inW.P.No.13754 of 2003, preferred by the dealer, so also Writ AppealNo.2005 of 2003.30. So far as O.S.A.Nos.67 and 68 of 2001 and 132 to 136 of2003 are concerned, all of them having become infructuous, are alsoaccordingly dismissed. 31. In view of our aforesaid observations and developments asnoticed and referred to above, whether the suits in C.S.Nos.880 and881 of 2000 and 703 of 2002 have become infructuous or not, is anissue to be determined by the trial Court. We leave it open for theparties to raise such question. 32. In the facts and circumstances of the case, there shall beno order as to costs.Sd/Asst.Registrar/true copy/Sub Asst.Registrarcs https://hcservices.ecourts.gov.in/hcservices/ To1.The Sub Asst. Registrar,Original Side, High Court, Madras.2. Territory Manager, Bharat Pertoleum Corporation Ltd., 35, Vaidyanatha Mudali Street, Tondiarpet, Madras-600 081.3. Chief Divisional Manager, Bharat Petroleum Corporation Ltd., 1, Ranganathan Garden, Anna Nagar, Madras-600 040.+1cc to Mr.O.R.Santhanakrishnan, Advocate Sr 72941KM (CO)km/20.12.O.S.A.Nos.67 & 68 of 2001, 132 to 136 of 2003,andW.A.Nos.2002 and 2005 of 2003