Indian Oil Corporation v. Bhatia Filling Station, Ajmer
2001-02-23
V.S.KOKJE
body2001
DigiLaw.ai
JUDGMENT 1. - Indian Oil Corporation and its Dy. Manager (sales), Ajmer have come up in this revision petition against rejection of their appeal by the learned Additional Distt. Judge No. 2, Ajmer failed against a temporary injunction issued by the Civil Judge (Junior Division), Ajmer city (North) in a civil suit brought against them by M/s. Bhatia filling Station, Mangaliawas, directing them to restore the supply of petroleum products which was stopped by the Indian Oil Corporation (in short 'the IOC'), on the basis of an inspection report dated 28.1.2000 and restraining them from terminating the dealership of the plaintiff till the disposal of the suit. 2. The suit was brought alleging that the plaintiff firm was a dealer in petroleum products of the defendant IOC for the last 25 years and that the dealership was working smoothly. On 28.1.2000, officers of the IOC visited the plaintiff's petrol pump and carried out an inspection. They prepared an inspection report on the same day. During the inspection, officers had collected six litres of petrol as sample which was taken in eight bottles. 750 ml. petrol was taken in four bottles separately as sample. It was alleged by the plaintiff that the action of taking sample and the inspection report prepared on its basis was against the Rule and the provisions of the Motor Spirit and High Speed Diesel Regulation, Supply, Distribution and Prevention of Mal Practices Order, 1988 (in short the Order of 1988'). The plaintiff further alleged that in the inspection report dated 28.1.2000, itself an order was passed that the sale and supply of petroleum products to the plaintiff was suspended from the same day which was highly improper.
The plaintiff further alleged that in the inspection report dated 28.1.2000, itself an order was passed that the sale and supply of petroleum products to the plaintiff was suspended from the same day which was highly improper. It was further alleged in the plaint that action of taking sample and the inspection report dated 28.1.2000 was illegal and against the law for the following reasons: (i) the inspection report should have been prepared in the presence of a gazetted officer or the Sales Officer of the Oil Company or the State Government only; (ii) the sample were taken in four glass bottles and nine litres petrol was collected as sample whereas according to the Rules, only six litres of sample could be collected; (iii) Officers of the defendant should have given two litres of sample to the plaintiff whereas they had given three litres of sample in four bottles to the plaintiff; (iv) That the sale and supply of the plaintiff was suspended by giving order in the inspection report itself whereas according to the Rules, after the samples were tested in the laboratory and the report was received against the plaintiff, sale and supply could be suspended, that too, only after issuing a show cause notice and providing an opportunity of hearing to the plaintiff. (v) That density of the petrol was within the permissible limit. (vi) That the petrol supplied by the defendant OIC was itself substandard and complaints were made to the IOC on 8.2.2000 in this respect. (vii) That the difference in density was because of the fault of the defendant IOC and this was demonstrated at the time of inspection itself. (viii) that action of the defendants was violative of the principles of natural justice as no opportunity of hearing was ever given to the plaintiff; (ix) That because of the illegal action of the defendant, the plaintiff's fundamental right under Article 14 of the Constitution was violated as the order for stopping the supply was arbitrary and discriminatory. It was also alleged in the plaint that on 6.3.2000 it came to the knowledge of the plaintiff firm that the defendants were going to terminate the dealership of the plaintiff on the basis of the inspection report dated 28.1.2000. 3.
It was also alleged in the plaint that on 6.3.2000 it came to the knowledge of the plaintiff firm that the defendants were going to terminate the dealership of the plaintiff on the basis of the inspection report dated 28.1.2000. 3. The,plaintiff sought the following reliefs: (i) A declaratory decree that the inspection report dated 28.1.2000 and the action of stopping the sale and supply of petroleum products to the plaintiff was arbitrary, illegal, unconstitutional and against the principles of natural justice as also against the provisions of.the Order of 1988 and was therefore, null and void. A permanent injunction was also sought prohibiting the defendants from terminating the dealership of the plaintiff on the basis of inspection report dated 28.1.2000 or on any other ground. A mandatory injunction was also sought to resume the supply of petrol and other petroleum products. 4. On an application for grant of temporary injunction being filed in the suit, the trial court granted a temporary injunction on 27.7.2000 directing the defendants to resume sale and supply of petrol and other petroleum products which was discontinued on the basis of inspection report dated 28.1.2000. A prohibitive injunction was also granted restraining the defendants from terminating the dealership of the plaintiff. It was also clarified in the order that the defendants shall be free to take samples in accordance with law again and if after getting the samples analysed in a laboratory, if they find the samples to be adulterated, they shall be free to suspend the sale and supply of petrol and petroleum products to the plaintiff in accordance with law. 5. An appeal preferred by the defendants before the learned Additional Distt. Judge No. 2, Ajmer was dismissed on 16.8.2000. 6. The revision petitioners contended that the courts below have exercised jurisdiction not vested in them by law; orders were against the provisions of Order 39 Rule 1 and 2 CPC; that the plaintiff had clearly committed breach of condition No. 35 and 46 of the agreement for which the dealership could be terminated; there was an arbitration clause in the agreement and the suit should not have been entertained, there was no prima facie case in favour of the plaintiff and the balance of convenience was also not in their favour and they were not likely to suffer any irreparable loss. 7.
7. Learned counsel for the non petitioners supported the orders of injunction. When asked by the Court as to how the courts by way of injunction could enforce specific performance of the contract of a selling agency, learned counsel for the non petitioner was at pains to convince the Court that it was a matter which was not totally in the private domain but public interest was also involved in it and the Court is entitled to interfere when the public at large will be seriously inconvenienced by suspension of the essential supplies like supply of petrol and petroleum products through an established agency. Learned counsel for the non petitioners also contended that the defendant was 'State' within the meaning of Article 12 of the Constitution of India and therefore, it could not act in violation of the fundamental rights of the citizens. It was further contended that since the action of suspension of supply of petrol and petroleum products and termination of the dealership agreement was arbitrary, the civil court could issue a temporary injunction to prevent the continuance of violation of fundamental right of the plaintiff. 8. Having heard learned counsel for the parties, I find that the courts below have acted atrociously in exercise of their jurisdiction. So far as the argument of the learned counsel that the fundamental right of the plaintiff was violated, suffice it to say that no one has a fundamental right to deal in a particular commodity and that too, when the supplier of the commodity does not want to supply the commodity because he believes on the basis of an inspection report that the dealer is engaged in adulteration of essential supplies like petrol and petroleum products. No one has a fundamental right to continue as a dealer despite being reasonably suspected of having committed breach of the dealership agreement and of having been found selling adulterated or substandard products. Moreover, mercifully, the impugned orders are not based on such a wide foundation by the lower courts also. The trial court has granted injunction finding the prima facie, there was no breach of dealership agreement and that it was yet to be proved whether the sample was substandard or adulterated. 9.
Moreover, mercifully, the impugned orders are not based on such a wide foundation by the lower courts also. The trial court has granted injunction finding the prima facie, there was no breach of dealership agreement and that it was yet to be proved whether the sample was substandard or adulterated. 9. Surprisingly, the courts below have failed to consider the provisions of the Specific Relief Act, which are the primary source of all actions for specific performance of a contract and injunctions, perpetual or temporary, mandatory or prohibitory. The suit was essentially for specifically enforcing the contract of dealership between the parties. 10. Section 10 of the Act provides for the cases in which specific performance of the contract is enforceable. It reads as under: "10. Cases in which specific performance of contract enforceable.- Expert as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the Court, be enforced (a) when there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done; or (b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.,' Section 14(1) and (2) of the Act is relevant in this respect and deserve to be reproduced hereunder as it deals with contracts not specifically enforceable: "14. Contracts not specifically enforceable: (1) The following contracts cannot be specifically enforced, namely (a) a contract for the non-performance of which compensation in money is an adequate relief; (b) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms; (c) a contract which is in its nature terminable; (d) a contract the performance of which involves the performance of a continuous duty which the court cannot supervise.
(2) Save as provided by the Arbitration Act, 1940, no contract to refer present or future differences to arbitrations shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect any subject which he has contracted to refer, the existence of such contract shall bar the suit." 11. Compelling the defendants not to terminate the dealership agreement amounts to asking them to continue the dealership which means specific performance of the contract of dealership. The Court has to apply its mind to the provisions of Section 10 and 14 of the Act while deciding whether there is any prima facie case in favour of the plaintiff when he asks for relief which amounts to asking for specific performance of the contract. As the suit is yet to be decided, I will not dwell upon the question in any more details but would only observe that there cannot be any prima facie case in favour of the plaintiff unless the Court finds that compensation in money would not afford adequate relief if their part of the dealership agreement is not performed by the defendants. I also do not find that the contract was such that it was not, in its own nature, determinable. Clause 3 of the dealership agreement read with clause 58 makes it clearly determinable. Thus, in view of the provisions of Sections 10 and 14 of the Act, there is no prima facie case in favour of the plaintiff in the present suit. 12. Section 38 of the Act provides as to when perpetual injunction can be granted. It reads as under: "38. Perpetual injunction when granted (1) - Subject to the other provisions contained in or referred to by this Chapter, a perpetual injunction may be granted to the plaintiff to prevent the breach of an obligation existing in his favour, whether expressly or by implication. (2) When any such obligation arises from contract, the court shall be guided by the rules and provisions contained in Chapter 11.
(2) When any such obligation arises from contract, the court shall be guided by the rules and provisions contained in Chapter 11. (3) When the defendant invades or threatens to invade the plaintiff's right to, or enjoyment of, property, the court may grant a perpetual injunction in the following cases namely (a) where the defendant is trustee of the property for the plaintiff; (b) where there exists no standard for ascertaining the actual damage caused, or likely to be caused, by the invasion; (c) where the invasion is such that compensation in money would not afford adequate relief; (d) where the injunction is necessary to prevent a multiplicity of judicial proceedings." 13. Section 41 provides as to when injunction cannot be granted. Clause (e) of the said Section provides that injunction cannot be granted to prevent the breach of contract performance of which could not be specifically enforced. 14. Thus, in respect of a contract which cannot be specifically enforced, no injunction can be granted to prevent its breach. The sum-total of all this is that when monetary compensation will be an adequate relief for the breach of the contract, it cannot be specifically enforced and no injunction can be issued to prevent the breach of such a contract. 15. in the aforesaid circumstances, I do not find that any prima facie case was available in favour of the plaintiff and therefore, the trial court had committed material irregularity in exercise of its jurisdiction to grant temporary injunction in the matter. 16. This case was heard and reserved for orders on 14.9.2000. On 25.9.2000, learned counsel for the petitioner moved an application bringing the later developments in the case on record and prayed for an interim order. It was brought to the notice of this Court that on 23.9.2000, the trial court had passed an order directing the petitioner IOC to resume supply of petroleum products within twelve hours failing which the concerned officer of the IOC had to pay damages at the rate of Rs. 5000/- per day personally to the plaintiff unless impugned order dated 27.7.2000 was stayed by this Court.
5000/- per day personally to the plaintiff unless impugned order dated 27.7.2000 was stayed by this Court. Thereupon, an interim order was made by this Court directing that the operation of the impugned order dated 27.7.2000 passed by the trial court and the appellate order dated 16.8.2000 passed by the ADJ No. 2, Ajmer was stayed and all further orders as a consequence of or in compliance of order for the non compliance of the aforesaid orders were stayed. It was also directed that if the trial court had passed any order holding any officer of the IOC responsible for the compliance or non compliance of the order passed by it, such order shall also remain stayed till 12.10.2000. 17. Thereafter, record of the case was called from the trial court and this Court was shocked to know that on 23.9.2000, the trial court had passed an order on the application under section 151 CPC that if the officer of the IOC authorised to sell and supply petroleum products, did not resume supplies to the plaintiff within 12 hours, he would be personally liable to pay Rs. 5,000/- per day to the plaintiff till a stay order is granted by the High Court or the temporary injunction is vacated by the High Court. It was also directed that if the temporary injunction granted by the trial court and confirmed by the lower appellate court is not set aside, the plaintiff shall be entitled to recover the loss suffered at the rate of Rs. 5000/- per day through deduction from the salary of such officer. To say the least, this was clearly an abase of the process of his own court by the learned Judge. 18. The order was passed on application under Section 151 CPC and not on the application under Order 39 Rule 2A CPC which was also filed separately on the same day i.e. 19.8.2000. In fact, no order was passed in the file initiated on the application under Order 39 Rule 2A CPC. In the suit, IOC was made defendant No. 1 and Dy. Manager (Sales), IOC Vaishali Nagar, Ajmer was made defendant No. 2.
In fact, no order was passed in the file initiated on the application under Order 39 Rule 2A CPC. In the suit, IOC was made defendant No. 1 and Dy. Manager (Sales), IOC Vaishali Nagar, Ajmer was made defendant No. 2. No other officer of the IOC was made a party in the suit or the miscellaneous proceedings arising out of the suit except in application under Order 39 Rule 2A CPC read with Section 151 CPC made on 21.9.2000 registered as Civil Misc. Case No. 346/2000 wherein action was sought to be taken against TH Hashmi, General Manager (Sales) IOC Ltd., Northern Region, New Delhi, Shri Ajay Verma. the then Divisional Manager, I0C Jaipur and V.R. Menon, Dy. Sales Manager, IOC Ajmer for the alleged disobedience of the temporary injunction order by issuing notice to the plaintiff. 19. In Misc. Case No. 302/2000 in which the order dated 23.9.2000 was passed against the concerned officers, the officers were not personally made parties. In the suit or in any of the applications arising out of it, no relief was sought against the officers of the IOC personally. No compensation was sought at the rate of Rs. 5000/- per day or at any rate in the Civil Misc. Application No. 302/2000 in which the order imposing personal liability on the officers of the IOC was made or in any other application. The only relief sought was to resume the sale and supply of petroleum products in compliance with the order dated' 27.7.2000 and for grant of police help for the purpose. It is beyond comprehension as to how the learned Judge of the Trial Court could have passed an order imposing personal liability to pay a sum of Rs. 5,000/- per day on the officers of the IOC. The order dated 23.9.2000 was, therefore, a gross abuse of the process of his own court by the Presiding Officer of the trial court. Even Order 39 Rule 2A CPC which is the specific provision for dealing with disobedience of directions does not provide for passing of such an order. 20. In the result, this revision petition is allowed and the impugned order of the trial court granting temporary injunction, dated 27.7.2000 as also the order of the appellate court confirming the temporary injunction, are set aside. The order dated 23.9.2000 passed by the trial court in Civil Misc.
20. In the result, this revision petition is allowed and the impugned order of the trial court granting temporary injunction, dated 27.7.2000 as also the order of the appellate court confirming the temporary injunction, are set aside. The order dated 23.9.2000 passed by the trial court in Civil Misc. Case No. 302/2000 is also set aside. The trial court is directed to dispose of the main suit expeditiously. 21. A copy of this order be sent to the Registrar General (Vigilance) of the Rajasthan High Court for consideration of appropriate action against the erring Judicial Officer on the administrative side in the light of observations made in this order.Revision allowed-Impugned orders set aside. *******