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2000 DIGILAW 713 (PAT)

HOWRAH MOTOR CO. LTD. v. BHARAT PETROLEUM CORPORATION

2000-05-11

S.K.KATRIAR

body2000
ORDER S. K. KATRIAR, J 1. This writ petition is directed against the order dated 17.2.2000 (Annexure 14), whereby the petitioner's dealerships agreement dated 22.7.1970 has been terminated by respondent No. 1 (Bharat Petroleum Corporation) for committing various breaches of the agreement committed by the petitioner-Company for the past few years continuously. The petitioner is a public limited company incorporated under the Companies Act, having its registered office at Calcutta and is, inter alia, engaged in the business of retail sale of petroleum products. The petitioner had obtained the licence to sell petroleum products from Burmah Shell, the predecessor-in-interest company of respondent No. 1. Burmah Shell was nationalised by an Act of the Parliament, namely, the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, and its interests and, assets in India were taken over by the Government of India and were transferred in terms of Section 7(3) of the Act to respondent No. 1, a Government Company, the entire shares of which are held by the President of India or his official nominees. As per the agreement, the petitioner has set up one outlet for retail sale of petroleum products in the township of Patna. The agreement is not on record. Mr. Raj Shivaji Nath, Sr. Advocate, appearing for the petitioner, informs the Court on Court's query that the agreement does not have a fixed period, a position seriously disputed by Mr. Ajay Tripathi, learned counsel for the Corporation. Respondent No. 2 issued show cause notice dated 21.5.1999 (Annexure 4) on the petitioner alleging therein protracted breaches of the contact and that the petitioner had over the years been called upon by various communications to rectify the defects and carry out the business strictly in accordance with the terms of the agreement. The aforesaid show cause notice (Annexure-4) provisionally stated that respondent No. 1 was of the view that the petitioner seems to be guilty of breach of contract as per DP & SL agreement signed between the parties on 22.7.1990 vide Clause No. 10B/13(a)(iii)(iv)(viiii). The aforesaid show cause notice (Annexure-4) provisionally stated that respondent No. 1 was of the view that the petitioner seems to be guilty of breach of contract as per DP & SL agreement signed between the parties on 22.7.1990 vide Clause No. 10B/13(a)(iii)(iv)(viiii). Following is the substance of the allegations against the petitioner : "(a) Poor management and/or financial crisis faced by you, (b) outlet remained dry on 2-3 occasions in a week, (c) according to the stock register, the retail outlet remained dry on 71 occasions between January 1998 and February, 1999, (d) virtually, no sale of Motor Spirit and Unleaded Petrol was carried out during the period 1.4.1999 to 31.5.1999 and RO remained totally defunct during the period 1.6.1999 till date which caused inconvenience to the motoring public and seriously damaging the Corporation's image and goodwill as also market interest in the city of Patna." The petitioner had shown cause by its communication dated 31.5.1999 (Annexure-5). On consideration of the entire materials including the cause shown by the petitioner, the impugned order has been passed, whereby respondent No. 1 has come to a definite conclusion that the petitioner has persistently been violating the terms of the agreement inter-parties, and petitioner No. 1 was running the business most negligently. According to the petitioner, the following Clause 10(viii) of the agreement has been invoked to terminate the agreement : "If the licensees shall commit or suffer to be committed any act within the opinion of the Marketing Manager of the company for the time being in Bombay or any other person nominated for this purpose by the Company is prejudicial to the interest or good name of the Company or its products. The decision of such officer or person shall be final and binding on the licensees." Respondent No. 1 has recorded the following findings in paragraphs 12 and 16 of the impugned order which are set out hereinbelow for the facility of quick reference : "(12) It has been observed that between January 1998 and February 1999, the outlet remained dry on more than 71 occasions. It was also observed that while the storage capacity in the underground tanks of the retail outlet was 35 KL and there was potential of the Retail Outlet of 6-7 KL per day, you were taking suppliers of only 6 KL on alternate day, by and large and were restricting sale from our retail outlet to between 2-3 KL per day by operating the retail outlet for a shorter duration during the day." "(16) Please note that in the last 3 years, we have given you ample opportunity to improve your performance and have given you various letters as explained hereinabove intimating the breaches committed by you. In spite of giving you so many opportunities, you have failed and neglected to rectify the breaches and now we have lost complete faith on you and/or are no longer interested in carrying on the business with you." "(17) For the breaches committed by you as explained hereinabove, as also in our previous letters, we hereby terminate the aforesaid agreement dated 22nd July, 1970. In view of the said termination, henceforth kindly do not enter upon the retail outlet premises belonging to us and/or use the facilities erected or installed by us on the said premises." It is thus manifest that the entire action has been taken by respondent No. 1 in terms of the agreement. Respondent No. 1 is alleged to have invoked Clause 13(a)(viii) set out hereinabove to terminate the contract on account of manifold and persistent breaches of the terms of the contract. It is obvious on the very face of it that the entire dispute relate to contractual obligations and, therefore, a writ petition is not maintainable. Learned counsel for the respondents has rightly invited my attention to my judgment dated 20.4.2000 in Jag Mohan Mehrotra vs. Hindustan Petroleum Corpn. (C.W.J.C. No. 1479 of 1999, dt. 20.04.2000), wherein I have reviewed the law relating to the question of Private Law in contradistinction to public law and the matters which could be subjected to judicial review. Relying on the judgment of the Supreme Court, I have held that this Court in exercise of its writ jurisdiction will not concern itself with the intricacies of the trade and commerce. Relying on the judgment of the Supreme Court, I have held that this Court in exercise of its writ jurisdiction will not concern itself with the intricacies of the trade and commerce. If the action of the State is related to contractual obligation or obligations arising out of the contract, the Court may not ordinarily examine it unless the action has some public law character attached to it. It has been held that the boundary between public law and private law is fundamental significance. Within the authority of public law are the boundaries of each particular set of statutory functions conferred upon public authorities, and the ultra vires doctrine applies to these. Cases in contract, tort or analogous causes of action to which public bodies are a party are not altered in their private law nature. If a public body sues a citizen, or the other way round, for breach of contract, negligence, trespass, even libel, the private law nature of the proceedings in principle is not affected by the public character of one of the litigants, vide Bognon Regis Urban District Council vs. Campion ((1972) 2 All ER 61). Whether proceedings are public or private in character is one question; whether the parties are public or private in character is a quite different question. There is even the question if whether the remedies are public or private in character. Mr. Justice Krishna Iyer in his judgment reported in Rohtas Industries Ltd. vs. Rohtas Industries Employees' Union ( 1976 SCC 82 ), while dealing with the expansive jurisdiction and extra-ordinary powers of the High Court under Article 226 of the Constitution and the self-imposed restrictions, spelt out the words of caution that it is one thing to affirm the jurisdiction, another to authorise its free exercise like a bull in a china shop. These words of caution were reiterated in its recent judgment reported in U.P. State Cooperative Land Development Bank Ltd. vs. Chandra Bhan Dubey ( (1999) 1 SCC 741 ), wherein the Supreme Court reiterated the aforesaid words of caution. I am equally reminded of the observations of Mr. Justice Krishna Iyer in a judgment of the Supreme Court that contractual obligations cannot be siphoned into writ jurisdiction. Counsel for the Corporation has invited my attention to the judgment dated 11.4.2000 of a learned Single Judge of the Calcutta High Court in Howrah Motor Co. I am equally reminded of the observations of Mr. Justice Krishna Iyer in a judgment of the Supreme Court that contractual obligations cannot be siphoned into writ jurisdiction. Counsel for the Corporation has invited my attention to the judgment dated 11.4.2000 of a learned Single Judge of the Calcutta High Court in Howrah Motor Co. Ltd. vs. Bharat Petroleum Corpn. Ltd. (W.P. No. 597 of 2000 dt. 11.04.2000), wherein prayer for restitution of termination of a similar agreement of the petitioner-Company with the respondent-Corporation with respect to another retail outlet in Calcutta has been rejected. He has, inter alia, relied on the following portions of the said judgment : "After hearing the parties I am of the opinion that termination which has been done by the respondent authorities in accordance with the agreement entered into between the parties, in my opinion, if any party has any grievance in respect of such termination, the parties shall be at liberty to have the matter decided before an appropriate forum which will be able to find out whether the breach committed by the parties and/or the termination of the said contract is illegal or not. The same also depends upon the disputed question of facts. The remedy of the petitioner lies in suit if the petitioner succeeds, the petitioners shall be entitled to get the damages. The writ Court at this stage will not go into the disputed questions of facts which is to be decided accordingly and in my opinion, the contract is absolutely in private nature. Parties have agreed to settle the terms amongst themselves and at this stage, the petitioner cannot come before this Court with a plea since the respondent is a Corporation and are estopped from taking any steps in the matter in accordance with the law. Accordingly, this application must fail and is hereby dismissed, however, no order as to costs." I am, thus, convinced that it is not possible for the High Court in writ jurisdiction to decide issues relating to contractual obligations on the basis of affidavit evidence, particularly a matter like the present one with a protracted and unabated history of alleged breaches of the agreement. It does not relate to a single event or act of violation of the terms of the agreement, but innumerable acts over the years in the past. It does not relate to a single event or act of violation of the terms of the agreement, but innumerable acts over the years in the past. This Court is in no doubt that adjudication of the issues raised in the present case needs elaborate evidence. To give one example from today's proceedings, learned counsel for the petitioner in the absence of the agreement informs the Court that the same has no fixed period, whereas counsel for the Corporation informs that it is for a fixed period. The irresistible conclusion, therefore, is that the cause sought to be raised in the present writ petition is not maintainable, and cannot be adjudicated by this Court in exercise of its writ jurisdiction. It relates to a contract trade, and business, and it will be open to the parties to seek remedy before an appropriate Court of competent jurisdiction. In the result, this writ petition is dismissed. Petition dismissed.