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2008 DIGILAW 703 (GAU)

Rajeswari Debbarma v. Union of India

2008-09-16

BIPLAB KUMAR SHARMA

body2008
JUDGMENT Biplab Kumar Sharma, J. 1. The Petitioner runs a gas agency in the name and style of M/s. Gomati Gas Agencies, East Dhaleswor, A.A. Road, Agartala, Tripura. She is aggrieved by the order dated 29.5.2007 issued by the Respondent Corporation by which the distributorship agreement executed by her with the Corporation as well as her appointment as distributor of LPG has been terminated. 2. The Petitioner belonging to Scheduled Tribe community was issued with the Letter of Intent (LOI) dated 7.6.1994 offering the LPG distributor at Agartala. In response to her application, interview was held on 23.5.1994. In the LOI the following conditions were incorporated: Clause 2.6: You shall not induct any partner(s): In case of individual(s), nor make any change in the constitution of the partners as existing at the time of application. Clause 2.7: It will always be a basic condition for an award of distributorship that you shall operate the distributorship personally full time a and you will give us a written undertaken to this effect and shall not assign or part with the same to any persons. 3. After the aforesaid LOI, the Corporation, formally appointed the Petitioner as LPG distributor in the name and style of M/s. Gomati Gas Agencies under Scheduled Tribe category. Alongwith the letter of appointment, three copies, of Distributorship Agreement were sent to the Petitioner with a direction to sign and seal and return the same. The Petitioner duly complied with the same. 4. After the appointment of the petitioner as LPG distributor, she has been operating the same since 1995. According to the Petitioner due to some financial crunch faced by her in meeting the working capital as well as expanding the business, she approached the State Bank of India, Agartala for a loan. Such course of action is state. I to be in the beginning of the year 2006. According to the Petitioner she also look for private finance and eventually obtained the same from two individuals, namely Smt. Rubi Deb (Sengupta) and Shri Tapas Banik. For obtaining the loan from them, the Petitioner executed the registered deed of agreement with the said two persons on 13.3.2000 in which it was stated that the Petitioner was the dealer/distributor of LPG cylinder appointed by IOCL and for smooth conduct of her business she was in urgent need of Rs. For obtaining the loan from them, the Petitioner executed the registered deed of agreement with the said two persons on 13.3.2000 in which it was stated that the Petitioner was the dealer/distributor of LPG cylinder appointed by IOCL and for smooth conduct of her business she was in urgent need of Rs. 5,00,000 as additional capital and to accommodate such required capital, she decided to part with her profit/earning against such financial investment/loan. 5. Pursuant to such agreement, said two persons provided the Petitioner with the loan of Rs. 3,00,000 and the parties arrived at an agreement that the second party would be entitled to get 60% of the total profit out of the business of the first party against the capital to be invested by the second party. It was also provided that the agreement would remain valid for a period of 10 years from the date of execution with the condition that the agreement can be terminated on mutual consent of both the parties. 6. After obtaining the part of the said loan, the Petitioner continued, her business till October 2006. It was at, that stage, the Respondent-Corporation issued show cause notice dated 24.10.2006 to the Petitioner asking her to show cause as to why the distributorship agreement should not be terminated. It was also indicated in the show cause notice that pending decision in the matter, the packed LPG supply to the Petitioner would remain under suspension. The allegation made in the show cause notice was the purported violation of the terms and conditions of the Indent Distributorship Agreement [Clauses 21, 23(c) etc.]. The show cause notice indicated the complaint dated 17.8.2006, lodged by said Smt. Rubi Deb (Sengupta) and Shri Tapas Banik to the effect that there was breach of agreement which they had executed with the Petitioner. It was stated in the notice that such agreement entered into by the Petitioner with the said two persons was in violation of the Distributorship Agreement. It was indicated that her such act was a clear case of serious deficiency in integrity and violation of the Distributorship Agreement on the part of the Petitioner. It was further indicated that by her such conduct she has relinquished the Distributorship to two outsiders in an unauthorized manner leading to benami arrangement. 7. It was indicated that her such act was a clear case of serious deficiency in integrity and violation of the Distributorship Agreement on the part of the Petitioner. It was further indicated that by her such conduct she has relinquished the Distributorship to two outsiders in an unauthorized manner leading to benami arrangement. 7. As per the show cause notice, relinquishing the authority of sole distributor led to slackness in taking active part in the management and running of the distributorship as sole proprietor and resulted in failure in ensuring personal supervision of the management. It was further indicated that the Petitioner's distributorship had been earlier booked under the provision of MDG for various pretext like delay in depositing weekly remittance, manipulation in preparation of ERB etc. leading to imposition of monetary penalty and issuance of warning letter. The Petitioner was also reminded of repeated counseling given to her for improving the function of the distributorship, as per the policy of the Corporation. The Petitioner was asked to furnish her reply to the show cause notice within 30 days. 8. In response to the said show cause notice, the Petitioner furnished the following reply: With due respect I would like to request you to kindly consider my application very sympathetically. Sir quoting above subject I am to inform you that I had a temporary financial problem for which I have taken a temporary loan of Rs. 3 lakhs from some of so called well wisher not knowing which intention was very bad to exploit me being I am innocent and not knowing his intention and with good faith I had signed the agreement since I never had any intention of violating the company's agreement clause. Sir, for this unintentional act of mine I do ask apology from you and I also undertake and give you guarantee that within a very short period of time I will cancel the agreement and the copy of the same will be forwarded to you for your perusal. Sir, I have got a sanction of Rs. 15 lakhs case credit, from SBI, Bazar Branch, Agartala (photocopy enclosed) for your ready reference please. Sir, I have got a sanction of Rs. 15 lakhs case credit, from SBI, Bazar Branch, Agartala (photocopy enclosed) for your ready reference please. Sir, to mention that Bank will start disburse the amount the day we start operating our distributor therefore sir, I humbly request being a ST Girl, I ask your honour to kindly save me from this episode and also save me from this exploitation and with your kind guidance and blessing I want to operate distributorship smoothly. Sir, please do me the favour for the last time for which I remain highly oblige. Thanking you sir. Yours faithfully Sd/- (Smt. Rajeswari Debbarma) 9. After the aforesaid show cause notice and the reply the Respondent-Corporation issued the impugned Annexure-H letter dated 30.5.2007 terminating the agreement, and the distributorship with the Petitioner. The impugned order reads as follows: Indian Oil Corporation Ltd. (MD) North East State Office East Point Tower, Baimunimaidan, Guwahati-781021 Tel.: 0361-2551081, 2558503 Fax: 0361-2550764 Marketing Division N.E. State Office REGISTERED WITH A/D Ref.: No. NE/LPG/2/42 Date 29.5.2007 (1) Ms. Rajeswari Debbarma Sole Prop., ...Gas Agency Assam-Agartala Road East Dhaleswar, Agartala Tripura-799007 (2) Ms. Rajeswari Debbarma Sole Prop., Gomati Gas Agency Vill-Ranir Bazar Dist. Tripura West Tripura (3) Ms. Rajeswari Debbarma D/o. Late Nishikanta Debbarma P.S. Ranir Bazar Dist. Tripura (west) Madam, Sub: Termination of Indane Distributorship agreement dated 31st August, 1995. You have been operating as an Indane Distributor at Agartala, Tripura since 1995 under the terms and conditions as contained in the Distributorship Agreement dated 31st August, 1995 executed between you and our Corporation. It has been established that you had entered into an unauthorized agreement with Smt. Rubi Deb (Senpugta) and Shri Tapas Banik of Agartala, Dist. West Tripura (which was duly registered in March, 2006) vide which the rights in the sand distributorship had been relinquished in favour of those two outside persons without prior approval of the Corporation which is violation of the terms and conditions of Indane distributorship agreement dated 3rd August, 1995 [Clauses 21, 23(c)]. You have committed default and breach of the terms, conditions covenant and stipulation contained in the said Distributorship Agreement dated 31st August, 1995 and in spite of several written notice pointing out such default, you have failed to rectify the same. You have committed default and breach of the terms, conditions covenant and stipulation contained in the said Distributorship Agreement dated 31st August, 1995 and in spite of several written notice pointing out such default, you have failed to rectify the same. You have also not adhered to the instruction issued from time to time by us in connection with several practices to be followed by you in the supply and storage of the products of Indian Oil Corporation and/or otherwise. You have acted in a manner prejudicial to the interest and good name of the Corporation and its products. In the circumstances, you distributorship is liable to be terminated in terms of the Distributorship Agreement dated 31st August, 1995. In this connection, you were served with show cause notice dated 24th October, 2008 you have filed to show cause and/or adequate reasons why your distributorship should not be terminated and appropriate proceedings initiated against you. You were also counseled earlier by the Senior Officials of the Corporation in this regard. In the circumstances, the Indian Oil Corporation in exercise of the rights conferred upon it by the said Agreement dated 31st August, 1995 hereby terminates the Distributorship Agreement and you appointment as a Distributor of LPG with immediate effect. This is, however without prejudice to our rights and contentions in the matter. Thanking you, Yours faithfully, For Indian Oil Corporation Ltd. (MD) Sd/- (GM, Neso) 10. The Respondents have filed their counter affidavit justifying their action. They have stated that since the Petitioner violated the terms and conditions of the distributorship and thereby flouted the confidence, reposed on her in such an important matter of public dealing, the Corporation, was within its competence and authority to terminate the distributorship. 11. I have heard Ms. A.K. Goswami, learned senior Counsel assisted by Mr. D. Saikia, learned Counsel for the Petitioner as well as Mr. M.K. Choudhury, learned senior Counsel and Standing counsel, IOCL (MD) assisted by Mr. M. Dutta, learned Counsel for the Corporation. 12. According to Mr. Goswami merely, because the Petitioner obtained private loan on certain terms and conditions, same by itself cannot lead to the inference that the Petitioner violated the terms and conditions of the distributorship. According to him it is not a case of inducting new partner to the distributorship. M. Dutta, learned Counsel for the Corporation. 12. According to Mr. Goswami merely, because the Petitioner obtained private loan on certain terms and conditions, same by itself cannot lead to the inference that the Petitioner violated the terms and conditions of the distributorship. According to him it is not a case of inducting new partner to the distributorship. He has placed reliance on the decision of the Apex Court reported in Harbanslal Sahnia v. I.O.C.L., (2003) 2 SCC 107 . On the other hand, Mr. M.K. Choudhury, learned Counsel for the Respondent Corporation submitted that it being a clear case of violation of terms and conditions of the LPG distributorship, the Respondent-Corporation adopted the right course of action and the writ court exercising the power of judicial review under Article 226 of the Constitution of India will not sit on appeal over the decision of the Corporation. 13. Mr. Choudhury has also placed reliance on the two decision as reported in Sanjana M. Wig v. Hindustan Petroleum Corporation, (2005) 8 SCC 242 and Principal Secretary to Govt. of Nagaland v. Dimapur Contractors and Suppliers Union and Anr., 2007 (2) GLT 260. 14. The decisions in Sanjana M. Wig and Principal Secretary to Govt. (supra) are on the question of maintainability of the writ petition in view of alternative remedy being available to the Petitioner. In the case Harbanslal Sahnia (supra) the Apex Court held that the exclusion of writ jurisdiction for availability of alternative remedy is a discretion and not one of compulsion. In that case it was found that the Petitioner's dealership which was their bread and butter came to be terminated for an irrelevant and non-existent cause. It was also held that the writ petition was maintainable although there was alternative remedy by way of arbitration proceeding. 15. In the case Sanjana M. Wig (supra), the Apex Court emphasized on self imposed restraint by the High Court in exercising the writ jurisdiction in a case where there is alternative remedy. It was observed that if the terms and conditions of agreement provides for alternative remedy, unless the domestic forum is shown to be a failure, the writ court will be reluctant to entertain the writ petition in such matters. 16. It was observed that if the terms and conditions of agreement provides for alternative remedy, unless the domestic forum is shown to be a failure, the writ court will be reluctant to entertain the writ petition in such matters. 16. In Dimapur Contractors and Suppliers Union (supra), the Division Bench of this Court dealing with demand of payment of bills after performance of contract held that writ petition will not lie for mere recovery of the amount due and payable under the contract by the Govt. However, it was held that the writ would be maintainable when the State discriminates in contractual matters. 17. While the learned Counsel for the Petitioner placing reliance on the decision of Harbanslal Sahnia (supra), argued, that the plea of the Respondents that the writ petition is not maintainable there being alternative remedy is mot to be accepted, learned Counsel for the Respondent Corporation placing reliance on the two decisions aforementioned, submitted that this is not a fit case to exercise the writ jurisdiction there being alternative remedy available to the Petitioner. 18. In paragraph-21 of the counter affidavit, the Respondents have referred to Clause 37 of the agreement between the Petitioner and the IOCL providing for arbitration in case of any dispute or difference of any opinion between the parties. In fact, the clause provides that the sole arbitrator would be the Director (Marketing) of the Corporation or such officers of the Corporation whom may be nominated by the Director (Marketing). The decision on which the learned Counsel for the Petitioner has placed reliance, i.e., Harbanslal Sahnia, is not applicable to the facts and circumstances involved in the case. Dealing With the view taken by the High Court that remedy by way of arbitration clause was available to the Appellants and therefore the writ petition filed by the Appellants was liable to be dismissed, the Apex Court observed that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. It was observed that in an appropriate case in spite of availability of alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies, namely (i) where the writ petition seeks enforcement of any fundamental rights, (ii) where there is failure of principles of natural justice and (iii) Where the orders or proceedings are wholly without jurisdiction or the vires of an act is under challenge. Having regard to the facts and circumstances involved in that case in which the Petitioner's dealership, their bread and butter, came to be terminated for an irrelevant and non-existent, cause, the Apex Court held that the case attracted the applicability of the first two contingencies. 19. Above is not the case in hand. The distributorship granted to the Petitioner is with the specific terms and conditions by way of an agreement arrived at by and between the parties. Clause 37 of the agreement clearly provides for resolution of dispute, if any, through appointed arbitrator. To bypass such a clause so as to make it a case of falling under the aforesaid three contingencies, the Petitioner will have to establish the same. From the materials on record it appears that the Petitioner on earlier occasions also was informed of the irregularities committed by her in running the distributorship. She was also imposed with monetary penalty coupled with issuance of warning letter. She was also counseled to improve the functions of the distributorship. 20. In spite of above position, she voluntarily entered into the agreement with the third party clauses of which have been exclusively referred to by the learned Counsel for the parties. The Petitioner has executed the agreement with the third party in respect of her dealership. The loan was obtained from the third party for smooth conduct of her business with the undertaking to provide financial investment in respect of the distributorship. It is specifically mentioned in the agreement that the amount of loan would be invested in the business of the distributorship. 21. The agreement is to remain in force for specified period and during the current year of agreement, the second party would be entitled to have equal shares out of profit likely to be earned jointly. It is specifically mentioned in the agreement that the amount of loan would be invested in the business of the distributorship. 21. The agreement is to remain in force for specified period and during the current year of agreement, the second party would be entitled to have equal shares out of profit likely to be earned jointly. The agreement can only be terminated by mutual consent Clause 6 of the agreement provides that from the effective date of agreement, the second party members shall have the right to look after, supervise and check up the books of account of the business of the first party particularly in the matter pertaining to the purchase and sale of LPG cylinder and other saleable items of the business of the first party and also the profit and loss account thereof and the first party shall never raise any objection in that matter. Clause 9 of the agreement provides that the Petitioner should neither enter into any other agreement with any other person or persons or organization in the matter relating to her and said business, nor she would take any attempt to close or wind up her said business so long the Agreement exists. The agreement also provides for further investment by the second party. 22. While the learned Counsel for the Petitioner tried to emphasize that the aforesaid clauses in the agreement are only in respect of loan taken by the Petitioner from them and, have nothing to do with the distributorship, learned Counsel for the Respondent-Corporation submitted that if the said agreement is not an agreement to run-the distributorship with the second party, what else would it be Clause 2.6 and 2.7 of the LOI have been quoted above which clearly provide that the LOI holder, i.e., the Petitioner shall not induct any partner(s) nor make any change in the constitution of the partners as existing at the time of application. Clause 2.7 provides the basic condition for awarding of distributorship which is that the Petitioner shall operate the same personally full time to which effect the Petitioner had furnished written undertaking with the stipulation that she would not assign or part with the distributorship to any persons. 23. Clause 2.7 provides the basic condition for awarding of distributorship which is that the Petitioner shall operate the same personally full time to which effect the Petitioner had furnished written undertaking with the stipulation that she would not assign or part with the distributorship to any persons. 23. Clause 21 of the agreement stipulates that the distributor shall not sell, assign, mortgage or part with or otherwise transfer his interest in the distributorship or the Right, interest or benefit conferred on him by the agreement to any person. Clause 23(c), specifically provides that except with the previous written consent of the Corporation, the distributor shall not enter into any agreement, contract or understanding whereby the operations of the distributor under the agreement are or may be controlled/cared out and/or financed by any other persons firm of company, whether directly or indirectly and whether in whole or in part. 24. Pursuant to the aforesaid conditions and the agreement which the Petitioner has executed with the third party, there is no manner of doubt that there is violation of the said conditions which is the basis of running the distributorship. Because of such violation coupled with earlier irregularities committed by the Petitioner, if the Respondent-Corporation has taken the impugned decision, same cannot be said to be a case of illegal and/or arbitrary exercise of poser warranting interference of this Court exercising the power judicial review. 25. For the aforesaid reasons, I do not find merit in the writ petition and accordingly it is dismissed. I hasten to add that dismissal of the writ petition exercising the power of judicial review under Article226 of the Constitution of India will not preclude the Respondents from taking a lenient view in the matter giving one more chance to the Petitioner to run the distributorship by imposing any other conditions and/or penalty as may be deemed fit and proper.