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1994 DIGILAW 20 (GUJ)

MAVJIBHAI MAGANBHAI PARMAR v. HINDUSTAN PETROLEUM CORPORATION LIMITED

1994-01-25

J.N.BHATT

body1994
BHATT, J. ( 1 ) THE termination of a dealership agreement in petroleum products like kerosene and light diesel oil by respondent No. 1-Hindustan petroleum Corporation Limited (h. P. C. for short) is under challenge under the provisions of Art. 226 of the Constitution of India. ( 2 ) A few material and relevant facts emerging from the record may be first stated. The petitioner applied for dealership on the reserved quota being Scheduled Caste member pursuant to the advertisement published in 1979 as per the practice and procedure. The petitioner was interviewed and he was granted a letter of intent on 5-11-1980. The petitioner had not complied with the terms and conditions of the letter of intent and, therefore, the same was withdrawn. Upon a representation made by the petitioner, his case was sympathetically considered and he was granted a fresh letter of intent on 3-1-1983. ( 3 ) THE petitioner was granted dealership by virtue of an agreement entered into between the petitioner and respondent No. 1-H. P. C. on 3-3- 1988. According to the case of the petitioner, he was carrying on the business in the name of M/s. Punam Corporation. Thus, Punam Corporation was a proprietary concern. It was the case of the petitioner before the h. P. C. that he has been doing business individually in the name and style of Punam Corporation. ( 4 ) SUBSEQUENTLY, the dealership agreement came to be terminated by an order of respondent No. 1 on 17-6-1988 which is questioned by the petitioner before this Court. The petitioner has inter alia further contended that the impugned order of termination of dealership agreement is illegal, unjust, improper and unwarranted. After the impugned order was passed, the petitioner had made several representations before many authorities including the Minister for Petroleum for reconsideration of his case. According to the case of the petitioner, all the representations made by him have not been attended and, therefore, he is constrained to recourse to the provisions of Art. 226 of the Constitution of India by filing this petition. ( 5 ) THE learned Counsel for the petitioner has raised the following contentions : (1) That the impugned order of termination of dealership agreement is not passed by the proper authority. ( 5 ) THE learned Counsel for the petitioner has raised the following contentions : (1) That the impugned order of termination of dealership agreement is not passed by the proper authority. (2) That the impugned order is passed without giving an opportunity of oral hearing to the petitioner and, therefore, is in violation of the principles of natural justice. (3) That the breaches committed by the petitioner are remediable and no such opportunity is given to remedy the breaches and, therefore, the show cause notice is bad in law. ( 6 ) THE learned Counsel appearing for the respondents has countered the aforesaid submissions and has also raised the following submissions : (1) That the petitioner has not come with clean hands and, therefore, not entitled to relief under Art. 226 of the Constitution. (2) There are disputed questions of facts. (3) That the petition is suffering from the vice of delay and latches as it is filed after more than one and half years. ( 7 ) IN view of the special facts and circumstances and considering the nature of the contentions, they are required to be decided simultaneously. ( 8 ) THE submission on behalf of the petitioner that the impugned order of termination of dealership agreement is not passed by the proper authority, is without any substance. Nothing has been, successfully pointed out which would go to even remotely indicate that the termination order is not passed by the proper authority. It is not correct to contend that the termination order is not passed by the duly constituted attorney. A mere look at the termination order dated 17/06/1988 clearly shows that it is passed by the Regional Manager who is also a duly constituted attorney. It is passed on behalf of respondent No. 1 by respondent No. 2 who was senior regional Manager and duly constituted attorney at the relevant point of time. There is no dispute about the fact that the dealership agreement was also signed by the constituted attorney of respondent No. 1 - H. P. C. The termination order is also passed by the senior Divisional Manager who was at the relevant point of time, a duly constituted attorney of respondent No. 1. Therefore, this Court is at great loss to understand as to how the impugned order is not passed by the proper authority. Therefore, this Court is at great loss to understand as to how the impugned order is not passed by the proper authority. The contention raised by the learned Counsel for the petitioner in this behalf is, therefore, without any substance and is required to be rejected. ( 9 ) IT had come to the notice of respondent No. 1 - H. P. C. that the petitioner had entered into an agreement with one Mr. Dayashanker G. Jaiswal, whereby the petitioner had allowed Mr. Jaiswal to operate the dealership agreement under the reserved quota. It was also brought to the notice of the respondents that the petitioner had executed a power of attorney in favour of Mr. Jaiswal. The said agreement and the power of attorney executed by the petitioner in favour of Mr. Jaiswal who was a third party, being in violation of seveial clauses of the dealership agreement dated 3-3-1988, the respondents had issued a show cause notice to the petitioner for termination of the dealership, at Ahmedabad. The first show cause notice was issued on 23-2-1988. Reply dated 3-3-1988 was filed by the petitioner. The second show cause notice for several breaches of the dealership agreement was also issued on 4-5-1988 which was replied on 20-5-1988 by the petitioner. The explanations offered by the petitioner were not found convincing and acceptable. The impugned termination of dealership agreement, therefore, came to be passed on 17-6-1988. ( 10 ) THE respondents were supplied a copy of the agreement and power of attorney executed by the petitioner in favour of Mr. Jaiswal. After receipt of complaint from Mr. Jaiswal, show cause notices were served to the petitioner and upon examination of the facts and circumstances, respondent no. 1 - H. P. C. found that Mr. D. G. Jaiswal was the real person who was to do business and the petitioner had only lent his name. It is not in dispute that Mr. Jaiswal does not belong to the reserved category. Therefore, he could never have applied or got dealership. The respondents found that the petitioner was only a Benami holder of dealership and actual owner or in any case, a partner of the petitioner was the said Mr. Jaiswal. It is not in dispute that Mr. Jaiswal does not belong to the reserved category. Therefore, he could never have applied or got dealership. The respondents found that the petitioner was only a Benami holder of dealership and actual owner or in any case, a partner of the petitioner was the said Mr. Jaiswal. Thus, according to the case of the respondents, the petitioner deliberately and intentionally perpetrated a fraud on the Corporation by not stating true and correct facts due to strained relations between the petitioner and Mr. Jaiswal as Mr. Jaiswal brought the facts to the notice of H. P. C. by making a complaint. The respondents contended that those who fulfilled the requisite conditions of reserved category were entitled to be considered and appointed as dealers. The respondents further contended that if the petitioner were to conduct business in the name of a firm or body or association or company, all of them have to fulfil the said requirement, like that-he was also belonging to reserved category. It may be noted that this aspect is not in controversy. It is also not in dispute that at the time of interview after the application, all the partners belonging to the reserved category have to appear and have to be interviewed by the respondent. The respondents found that an impression had been given by the petitioner all throughout in his application and at the time of interview and even in express writings, that the petitioner has been doing business in his individual capacity and he is the real person who is in charge of business under the dealership. ( 11 ) THE defence of the petitioner on this count is that since his sons were of young age and looking to the quantum of work which was required to be undertaken, the petitioner alone was unable to take care of all the operations and, therefore, with a view to managing the affairs in a proper way and manner, he had appointed Mr. Jaiswal as his manager. This plea raised by the petitioner in the petition is, seriously, challenged by the respondents. The respondents found that Mr. Jaiswal was either the real owner or a partner not belonging to reserved category and that he was not as such manager of the petitioner and, therefore, dealership agreement came to be terminated. Jaiswal as his manager. This plea raised by the petitioner in the petition is, seriously, challenged by the respondents. The respondents found that Mr. Jaiswal was either the real owner or a partner not belonging to reserved category and that he was not as such manager of the petitioner and, therefore, dealership agreement came to be terminated. The agreement was executed by the petitioner on 7-1-1983 in favour of Mr. Jaiswal. The respondents also relied upon the said agreement before passing the impugned order. Relying upon certain clauses in the said agreement, the respondents found that there was a benami operation of the dealership awarded to the petitioner as a sole proprietor of Punam Corporation. The respondents found the following facts from the said agreement and which are not in dispute : (1) That G. I. D. C. had allotted a plot [on which dealership facilities were provided] to the petitioner for Rs. 1,70,000. 00. The petitioner appointed mr. Jaiswal as his manager and administrator and that he would pay the said amount for the said plot instead of the petitioner. (2) Mr. Jaiswal agreed to invest necessary capital for business and construction of storage tank, compound wall, office building, etc. (3) Mr. Jaiswal had undertaken the responsibility of doing administrative work of business of Punam Corporation. (4) Bank accounts also would be operated by Mr. Jaiswal in the name of the said firm as administrator of the petitioner. (5) All expenses like Municipal taxes, electricity charges, salary of the office staff were to be paid by Mr. Jaiswal on behalf of the petitioner. (6) Books of accounts are to be maintained by Mr. Jaiswal and the petitioner was also given permission to inspect the same as and when required. (7) Clause 8 of the said agreement inter alia provided that after deducting all office expenses, 10% was to kept in reserve funds and the balance of 90% was to be divided equally between the petitioner and jaiswal. (8) The petitioner was to be paid Rs. 1000. 00 as ad hoc amount towards profit and he had not to bear anything towards loss in case the firm suffers any loss. Thus, it was made very clear that loss was to be borne only by Jaiswal. (8) The petitioner was to be paid Rs. 1000. 00 as ad hoc amount towards profit and he had not to bear anything towards loss in case the firm suffers any loss. Thus, it was made very clear that loss was to be borne only by Jaiswal. ( 12 ) THE respondents contended that in view of the agreement and the power of attorney executed by the petitioner in favour of Jaiswal, the dealership business in kerosene and diesel oil was to be done by the firm consisting of the petitioner and Jaiswal. In fact, the real owner of the firm was Jaiswal because in case of loss, it was to be borne by jaiswal exclusively and not by the petitioner. Whether there was profit or loss, the petitioner was to be paid an ad hoc amount of Rs. 1,000. 00. Thus, according to the case of the respondents, the petitioner had misled H. P. C. from the time of applying for dealership in pursuance of the advertisement in 1979. It is the case of the respondents that they found that at no point of time, the petitioner had ever any intention of doing business himself. In anticipation of dealership agreement, the petitioner and jaiswal had prepared a power of attorney even before the petitioner could be granted the dealership. The petitioner had executed the agreement in favour of Jaiswal, on 7-1-1983. The power of attorney was also executed on 6-1-1982 by the petitioner in favour of Jaiswal. It is contended on behalf of the petitioner that the agreement in favour of Jaiswal was cancelled on 27-2-1983. This is again a disputed fact. Whether it was cancelled and if yes, when - is a disputed question of fact. However, it may be mentioned that the general power of attorney executed by the petitioner in favour of Jaiswal on 6-1-1982 was cancelled on 3-2-1988. There is also no dispute about the fact that Jaiswal remained in charge of the management even after revocation of agreement for more than five years after the agreement granting dealership was executed on 3-3-1983. However, it may be mentioned that the general power of attorney executed by the petitioner in favour of Jaiswal on 6-1-1982 was cancelled on 3-2-1988. There is also no dispute about the fact that Jaiswal remained in charge of the management even after revocation of agreement for more than five years after the agreement granting dealership was executed on 3-3-1983. In short, the respondents found that true and correct facts were not disclosed by the petitioner to H. P. C. right from the beginning and, therefore, after serving two show cause notices, giving 15 days time and considering the explanations tendered by the petitioner, the impugned order of termination of dealership agreement came to be passed on 17-6-1988 holding that there were breaches of the dealership agreement dated 3-3-1983. The contention that the respondent-authority has not properly appreciated the evidence and material recorded by it cannot be accepted firstly because it should strictly be noted that this Court is not an appellate Court. The decision rendered by the respondent-authority cannot be questioned on the ground that there is a failure to properly appreciate the material on record. Secondly even factually also, this contention does not seem to be well founded. ( 13 ) THE next contention was that the breaches committed by the petitioner are remediable and in view of the provision of Clause 31 (A), the respondent-authority was bound to give a notice for four days so that the petitioner can get an opportunity to remedy the breaches. It is further contended in this behalf that such an opportunity was not given and, therefore, the impugned order is illegal. Such a contention is also without any substance. The learned Counsel for the respondents has contended that apart from the breaches of other covenants of the dealership agreement, the petitioner is also responsible for furnishing certain information. It is found to be untrue and incorrect in material respect and the attention of this Court is drawn to the ground mentioned in Clause 31 (L ). It is true that this clause is specifically not mentioned in the show cause notice. However, that aspect itself would not render the impugned order illegal. It is found to be untrue and incorrect in material respect and the attention of this Court is drawn to the ground mentioned in Clause 31 (L ). It is true that this clause is specifically not mentioned in the show cause notice. However, that aspect itself would not render the impugned order illegal. The respondent-authority would be entitled to terminate the agreement at once upon happening of any of events enumerated in Clauses 31 (B) to 31 (L), However, the respondent-authority has not availed of this contractual entitlement in the happening of event under Clause 31 (L) and, therefore, instead of terminating the dealership agreement at once, the respondent-authority has served the show cause notice giving clear fifteen days time to give explanation. After considering the explanation given by the petitioner, the respondent-authority reached to the conclusion to terminate the dealership agreement. ( 14 ) IT will be necessary at this stage to mention the relevant subclauses of Clause 31 of the Agreement. Clause 31 reads as follows :"notwithstanding anything to the contrary contained hereinabove, the Corporation shall be entitled to terminate the agreement at once upon or at the time of happening of any of the following : (A)If the dealer shall commit a breach of any of the covenants and stipulations contained in the agreement and fail to remedy such breach within four days of the receipt of a written notice from the Corporation in that regard. "sub-clause (B) of Clause 31 mentions three grounds upon which the respondent-authority is entitled to terminate the agreement at once. In subclauses (C) to (L), various circumstances are enumerated and in the event of happening of any one of such circumstances, the respondent-authority is entitled to terminate the dealership agreement at once. Sub-clause (L) of Clause 31 is relevant. It reads as under :"if any information given by the dealer in his application for appointment as a dealer shall be found to be untrue and incorrect in any material respect. " ( 15 ) THE respondent-authority found that the petitioner had furnished untrue and incorrect information in material respect about the management and running the dealership business. Therefore also, the respondent-authority has contended that on account of furnishing untrue and incorrect information in material respect, like that - about financing dealership business, management and running the business, the respondent-authority became entitled to terminate the dealership agreement at once. Therefore also, the respondent-authority has contended that on account of furnishing untrue and incorrect information in material respect, like that - about financing dealership business, management and running the business, the respondent-authority became entitled to terminate the dealership agreement at once. However, instead of availing this right to terminate the dealership agreement at once, it found expedient to serve a show cause notice. Two show cause notices came to be served. 15 days clear time was given to the petitioner to explain the circumstances. The respondent-authority taking into account the replies given by the petitioner reached to a positive and clear conclusion that there were breaches of several clauses and covenants of the agreement and terminated the dealership agreement. It is true that specifically Clause 31 (L) is not mentioned. But that aspect itself would not render the show cause notice and the impugned order illegal. It is specifically mentioned in the show cause notice about the agreement executed by the petitioner with Mr. Jaiswal whereby Jaiswal was allowed to operate the dealership business. It is also specifically mentioned in the show cause notice that the said agreement and the power of attorney executed by the petitioner in favour of Mr. Jaiswal are in violation of Clauses 17 (B) and 17 (C) (i) of the dealership agreement dated 3-3-1983. Therefore, substance is mentioned and mere non-mention of Clause 31 (L) of the dealership agreement cannot be said to have prejudiced the petitioner in any respect. Thus, it is the substance and not the form of the show cause notice, that is to be considered. Clause 14 prohibits the dealer not to sell, assign, mortgage or part with or otherwise transfer his interest in the dealership or the right, interest or benefit conferred on him by the said agreement to any person. Clause 17 (A) prescribes that the dealer has undertaken faithfully and promptly to carry out, observe and perform all directions and orders or rules made from time to time by the Corporation nor it representatives for the proper carrying on of the dealership of the Corporation. Clause 17 (B) provides that it shall be a paramount condition of the agreement that the dealer himself disclosed material particulars about the nature of ownership, number of partners in case of a partnership business. Clause 17 (B) provides that it shall be a paramount condition of the agreement that the dealer himself disclosed material particulars about the nature of ownership, number of partners in case of a partnership business. The respondent-authority found that the petitioner is guilty of non-furnishing of correct and true particulars in material respect and therefore, the dealership agreement came to be terminated. Under the circumstances emerging from the record of the present case, it cannot be contended even for a moment that mere non-mention of one clause or clauses in the show cause notice did not under the notice and the impugned order illegal. Therefore, the contention in this behalf raised on behalf of the petitioner is without any substance and is required to be rejected. ( 16 ) THE next submission that there is a breach of principles of natural justice is also not acceptable. It is contended that oral hearing was not given to the petitioner and, therefore, the impugned order is unjust and illegal. There is no dispute about the fact that two show cause notices were served and the petitioner had tendered his replies explaining the circumstances. It is also not in dispute that oral hearing is not given. Therefore, the question required to be resolved is as to whether non-giving of oral hearing to the petitioner before passing the impugned order would tantamount to nonobservance of principles of natural justice or not. In light of the settled principles of law of this Court and considering the facts and circumstances emerging from the record of the present case, the answer would be that nongiving of personal hearing would not render the impugned order illegal. ( 17 ) NO doubt, the adjudicating authority must observe the principles of natural justice and there cannot be any quarrel about this proposition of law. But what should be the extent and scope of observance of principles of natural justice would always depend upon the facts and circumstances of the case. It cannot be contended that non-giving of oral hearing is ipso facto sufficient to render the impugned order illegal. Oral or personal hearing cannot constitute always as an integral part of natural justice, and cannot be claimed as a matter of right in all such matters. It cannot be contended that non-giving of oral hearing is ipso facto sufficient to render the impugned order illegal. Oral or personal hearing cannot constitute always as an integral part of natural justice, and cannot be claimed as a matter of right in all such matters. Principles of natural justice require that the party who is being visited with adverse or evil result of consequence ought to be given effective hearing. It does not necessarily mean that it should always be by way of oral or personal hearing. The petitioner gave two replies to the show cause notices and the material relied upon by the adjudicating authority for revocation of the dealership agreement was disclosed fully to the petitioner. The replies submitted by the petitioner were considered before passing the impugned order. In the facts and circumstances, it cannot be gainsaid that the petitioner was afforded effective opportunity to present his case. The principles of natural justice cannot be imprisoned in a rigid formula. It must be stated that principles of natural justice must be observed but its extent and scope would mainly depend upon the facts and circumstances and the subject-matter. ( 18 ) APEX Court in A. K. Kraipak v. Union of India ( AIR 1970 SC 150 ) has observed : "what particular rule of natural justice should apply to a given cage must depend to a great extent on the facts and circumstances of that case, the frame work of the law under which the enquiry is held and the constitution of the tribunal or body of persons appointed for that purpose. Whenever a complaint is made before a Court that some principle of natural justice had been contravened, the Court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case. " ( 19 ) SIMILARLY, in R. S. Dass v. Union of India ( AIR 1987 SC 593 ), it is observed :"it is well established that rules of natural justice are not rigid rules; they are flexible and their application depend upon the setting and the background of statutory provision, nature of the right which may be affected and the consequences which may entail, its application depends upon the facts and circumstances of each case. " ( 20 ) W. H. R. Wade has correctly summarised the law in this behalf in his book administrative Law" 1988, pp. 529-35, as follows :"it is not possible to lay down rigid rules as to when the principles of natural justice are to apply; not as to their scope and extent. Everything depends on the subject-matter, the application for principles of natural justice, resting as it does upon statutory implication, must always be in conformity with the scheme of the act and with the subject matter of the case. In the application of the concept of fair play there must be real flexibility There must also have been some real prejudice to the complainant, there is no such thing as a merely technical infringement of natural justice. The requirement of natural justice must depend on the facts and the circumstances of the case, the nature of the enquiry, the rules under which the tribunal is acting, the subject-matter to be dealt with, and so forth. " . ( 21 ) IT could, therefore, be seen from the aforesaid observations of the two decisions of the Apex Court that doctrine of natural justice cannot be circumscribed within a straight jacket formula. Observance of principles of natural justice or what particular rule of natural justice should apply will have to be judged on the facts and circumstances of each case. In the present case, the petitioner is given an opportunity to explain the circumstances. The petitioner had, as such, submitted his replies pursuant to two show cause notices. It is an admitted fact that replies given by the petitioner were considered by the adjudicating authority before the impugned order came to be passed. Whatever material relied on by the adjudicating authority was disclosed to the petitioner and the petitioner had submitted his detailed explanation which was considered and thereafter, the impugned order came to be passed. It is also an admitted fact that no oral hearing was asked for in the replies. Oral hearing, therefore, was not required to be given. It may be noted that oral hearing is not regarded as sine qua non of the doctrine of natural justice. Unless and until a person is entitled to personal or oral hearing under the provisions of statutes or rules or agreement, he cannot claim for the same as a matter of right. It may be noted that oral hearing is not regarded as sine qua non of the doctrine of natural justice. Unless and until a person is entitled to personal or oral hearing under the provisions of statutes or rules or agreement, he cannot claim for the same as a matter of right. There is no dispute about the fact no such right of oral hearing is conferred either in the dealership agreement or in the relevant rules or the statute. Moreover, oral hearing was not asked for in the replies. Not only that, the facts and circumstances emerging from the record of the present case do not even remotely indicate that it was necessary for a just adjudication of the dispute. Therefore, this Court has no hesitation in finding that the contention raised on behalf of the petitioner that non-giving of oral hearing will render the impugned order illegal, is unsustainable. ( 22 ) THE aforesaid view of this Court is very much reinforced by the observations of the Apex Court in M. P. Industries v. Union of India, air 1966 SC 671 . It is observed in the said case :"it is no doubt a principle of natural justice that a quasi-judicial tribunal cannot make any decision adverse to a party without giving him an effective opportunity of meeting any relevant allegations against him, but the said opportunity need not necessarily be by personal hearing. It can be by written representation. Whether the said opportunity should be by written representation or by personal hearing depends upon the facts of each case and ordinarily it is in the discretion of the tribunal. " ( 23 ) THUS, it could very well be seen from the aforesaid observations that oral hearing does not constitute an integral part of doctrine of natural justice and non-observance thereof would not render the impugned order illegal. It is, therefore, very well established that principles of natural justice do not contemplate personal hearing and if all the relevant circumstances have been taken into account before passing the questioned action or the impugned order of the adjudicating authority, the said action cannot be set aside merely on the ground that oral hearing was not given to the petitioner. Therefore, on that count, the impugned order cannot be said to be bad, unjust or illegal. ( 24 ) THE respondent-authority had addressed itself mainly to the following question. Therefore, on that count, the impugned order cannot be said to be bad, unjust or illegal. ( 24 ) THE respondent-authority had addressed itself mainly to the following question. Had the petitioner disclosed full information in material respect, like that - nature of ownership of buness, type of the management, financing etc. at the time of application or his appointment as a dealer, whether H. P. C. would have ever given the dealership out o reserved quota or category and not from the open category ? ( 25 ) CONSIDERING the facts and circumstances and the replies tendered by the petitioner, the respondent-authority reached to a positive conclusion that it would not have granted such dealership out of the reserved quota when essentially a person, viz. , Mr. Jaiswal was responsible for financing and commissioning the dealership business and also in charge of the management and business of the dealership which is not falling within the reserved category and, therefore, the dealership agreement was obtained by the petitioner without, disclosing true and correct information in material respect and, therefore, the impugned dealership agreement came to be terminated after observing doctrine of principles of natural justice required under the circumstances. ( 26 ) HAVING regard to the facts and circumstances emerging from the record of the present Court, this Court has no hesitation in holding that the impugned order dated 17-6-1988 passed by the respondent-authority terminating the dealership agreement cannot be said to be unjust, unreasonable or illegal and, therefore, this petition is totally meritless and deserves only and only dismissal. ( 27 ) AT this stage, Mr. Jayant Patel, learned Counsel for the petitioner submits that interim relief granted by this Court should be continued for a further period of six weeks as the petitioner wants to pursue his further remedy before appropriate forum. Considering the facts and circumstances, the interim relief is extended till 3/03/1994. ( 28 ) IN the result, the petition is dismissed. Rule is discharged. There shall be no order as to costs considering the special facts and circumstances of the present case. .