SRI NILAKANTHA RATH v. INDIAN OIL CORPORATION LIMITED
2009-09-03
I.M.QUDDUSI, SANJU PANDA
body2009
DigiLaw.ai
JUDGMENT : Sanju Panda, J. - Challenge has been made in this Writ Petition to the notice dated 8th February. 2008 issued by the Senior Divisional Retail Sales Manager, Indian Oil Corporation Limited terminating the dealership agreement dated 27.3.2007 executed between the Petitioner & the Opposite Parties for running the retail outlet at Gundi Chhak Konark, Puri. 2. The facts, as narrated in a nutshell are as follows: The Petitioner approached Opposite Parties in response to an advertisement for opening of the retail outlet at Gundi Chhak, Konark, Puri. His application was allowed by the Indian Oil Corporation. He executed an agreement with the Opposite Parties on 31.3.1999 leasing the land in favour of the Opposite Parties. It may be noted here that the land on which the retail outlet was going to be opened was in the name of the wife of the Petitioner. After opening of the retail outlet by the Petitioner, petroleum products were distributed to the local people. Said business was continuing till 25.5.2007. All of a sudden, the Civil Supplies Officer. Puri & mobile laboratory of the Opposite Parties reached the petrol pump of the Petitioner & started enquiring about the purity of the products. As per the Petitioner, two samples were taken while petrol & diesel were being supplied to a service station. The first sample was taken at the depot when petrol or diesel was supplied to the carrier/transporter who delivers the same at the service station. The second sample was drawn when the transporter handed over the petrol/diesel to the dealer. The said sample was kept in an aluminium container with a wooden box being sealed. On the said sealed cover the dealer & the driver of the carrier put their signatures. 3. The case of the Petitioner is that two samples were drawn, one was retained at the depot & the second was kept under lock & key by the present Petitioner. On 25.5.2007 while the samples were drawn from the petrol pump & sent for examination, the Manager of the Petitioner repeatedly requested that the samples which were drawn from the carrier & was kept by the Petitioner in the sealed cover, should be taken for examination simultaneously so that the officials could arrive at a decision regarding purity of the product.
However, their request was turned down & the newly appointed Manager of the Petitioner signed in the field report being ignorant of the procedures. Opposite Parties seized the service station of the Petitioner. Thereafter, immediately the Petitioner made a representation to the Senior Divisional Retail Sale Manager. Bhubaneswar for testing the retained samples which he had kept at the time when the transporter delivered petrol/diesel at the service station. But his representation was not taken into consideration & the officers who enquired regarding purity of the product came to a conclusion that the products sealed by the Petitioner had been adulterated. They issued notice on 7.6.2007 calling upon the Petitioner to explain as to why action for cancellation of the agreement should not be taken against him. Being aggrieved by the said notice, he filed W.P(C) No. 7067 of 2007 before this Court which was disposed of on 12.12.2007 with a direction that the tank lorry sample, which the Petitioner was said to have kept & willing to produce, should be taken into possession by the competent officer of the Indian Oil Corporation. It would be open for them to verify if the same was taken in presence of the Tank Lorry owner/driver or representative along with the signatures of the Driver & if it was found that the seal was intact he should send the same for testing & tally the same with the sample taken from the retail outlet. Thereafter on the oasis of the reports appropriate order should be passed as expeditiously as possible, preferably within a period of 3 weeks from the date of receipt of the order. The further case of the Petitioner is that the sample retained by him was made available to the Opposite Parties for required examination. While the matter stood thus, the Opposite Parties issued the impugned notice dated 8.2.2008 terminating his dealership. 4. It is submitted by the Learned Counsel for the Petitioner that the samples drawn from the petrol pump & the samples kept by the Petitioner were to be examined to find out whether the product was adulterated or not. Though the sample was made available to the Opposite Parties without examining it they rejected the said sample on a technical ground that the driver who carried the load disowned the signature appearing on the sample labels as his own signature.
Though the sample was made available to the Opposite Parties without examining it they rejected the said sample on a technical ground that the driver who carried the load disowned the signature appearing on the sample labels as his own signature. The driver who carried the load had signed on the sealed cover. However, he disowned the signature since the authorities determined to harass the Petitioner. The products which were supplied to the Petitioner vide Invoice No. 619046416 dated 19.5.2007 also bear the signature of the same driver of the carrier who signed on the sealed cover. Without tallying both the signatures, Opposite Parties took the simplest way to reject the samples kept by the Petitioner in the retail outlet. Therefore, he has approached this Court by invoking the jurisdiction under Article 226 of the Constitution of India as the termination order is violative of principle of natural justice. 5. It is further submitted by the Learned Counsel for the Petitioner that the Opposite Parties had done so with a view to benefit another person who is in the queue. However, he Petitioner has not impleaded the third person as a party to the Writ Petition. 6. Pursuant to the notice issued by the Court, the authorities of the Indian Oil Corporation appeared & filed their counter affidavit traversing the allegations made by the Petitioner & stating that the Writ Petition which arises out of an agreement dated 27.3.2007 involves disputed question of facts & alleged breach of contract. An alternative remedy by way of reference to arbitration for settlement of dispute is provided under Clause-67 of the agreement dated 27.3.2007. Therefore, since the Petitioner wants to enforce the contractual obligation which involves the disputed questions of facts, he should not be permitted to invoke the jurisdiction under Article 226 of the Constitution of India. As per clause-iv of the Indian Oil Corporation Marketing Discipline Guideline, 2005 the dealer in the event of termination of his dealership within 30 days of the order has a right to appeal before the appropriate authority who has the power to decide the appeal. Therefore, the Petitioner without approaching such Appellate forum against the order of termination should not have directly come to this Court invoking the extraordinary jurisdiction.
Therefore, the Petitioner without approaching such Appellate forum against the order of termination should not have directly come to this Court invoking the extraordinary jurisdiction. Further they have stated that the Corporation is a Government Company incorporated under the provisions of the Companies Act, 1956 carrying on business of sale & distribution of petroleum products throughout the country by engaging dealers & distributors & provides all infrastructures including land, equipment etc. 7. For better appreciation, the reasons for which the dealership of the Petitioner was terminated as enumerated in the impugned notice-dated 8.2.2008 are quoted below: 1. On the date of inspection (25.05.2007) the TT retention samples were not produced on demand by the Inspecting Officials. Rather your representative present/participating in the inspection categorically told the inspecting Authorities that no TT retention samples were taken & preserved against Invoice No. 619046416 dt. 19.05.2007 & hence he was unable to produce the same. This has been further recorded in the field report jointly signed by the Inspecting authorities & your representative. 2. The TT driver Sri G. Das of TT No. OR05P/7944 who carried the Load against Invoice No. 619046416 dt. 19.05.2007 denied the fact that any TT retention sample was drawn & preserved by you pertaining to the load & the driver also disowned the signature appearing on the face of the sample labels as his own signature. 3. In line with clause No. 2.5 (F) of MDG-2005, whenever TT sample is not retained/made available by the Dealer to the inspecting officials at the time of inspection at the RO, the same would not be considered for testing at a later stage & in such case the result of the RO sample will be compared with the supply point sample & action, if any, will be initiated against/the Dealer only. 8. In the present case, Indian Oil Corporation for sale & distribution of the petroleum products constructed "A" site retail outlet for providing infrastructures i.e. land, developed the said site, constructed the boundary wall, approach road, sales room & made the lighting arrangement & installed the storage tank & dispensing unit & signage at its expenses by investing huge amount i.e. approximately Rs. 85 lakhs excluding the cost of the land in the year 1999. The retail outlet was completed in all respects for operation in the year 1 999.
85 lakhs excluding the cost of the land in the year 1999. The retail outlet was completed in all respects for operation in the year 1 999. As per the policy of the Company, the Petitioner being selected for the retail outlet, entered into an agreement for operation by the Petitioner as a dealer of the retail outlet vide dealership agreement dated 31.3.1999 which was revised after expiry. The revised dealership agreement between the Petitioner & the company was executed on 27.3.2007. 9. Some of the relevant terms & conditions of the said agreement are quoted below: Clause-2 - The Petitioner would have no right, title or interest in the said premises & only entitled to lease & licence to enter the said premises during the duration of the agreement. Clause-4 - The licence & permission granted as aforesaid for the use of the said premises & outfit shall terminate immediately on the termination of this agreement or on any breach of any of the terms thereof. Clause-56 - Notwithstanding anything to the contrary herein contained, the Corporation shall be at liberty to terminate this Agreement forthwith upon or at any time after the happening of any of the following events, namely: (a) If the Dealer shall commit a breach of any of the covenants & stipulations contained in the Agreement, & fall to remedy such breach within four days of the receipt of a written notice from the Corporation in that regard. (i) If the Dealer shall deliberately contaminate or tamper with the quality of any of the Corporation's products. Clause-67 - Any dispute or difference of any nature whatsoever or regarding any right, liability, act, omission or account of any of the parties hereto arising out of or in relation to this Agreement shall be referred to the sale arbitration of the Director Marketing of the Corporation, or of some Office of the Corporation who may be nominated by the Director Marketing. The Dealer will not be entitled to raise any objection to any such arbitration on the ground that the arbitrator is an officer of the Corporation or that he has to deal with the matters to which the contract relates or that in the course of his duties as an officer of the Corporation he had expressed views on all or any of the matters in dispute or difference. 10.
10. In terms of the said agreement, the Opposite Parties from time to time duly supplied petroleum products to the Petitioner for smooth functioning of the retail outlet. On 25.5.2007 the Incharge, Industry Mobile lab along with Civil Supply Officer, Puri jointly inspected the Petitioner's retail outlet. The samples of Motor Spirit (MS) & High Speed Diesel (HSD) taken for testing failed in Marker test. The Petitioner was advised to suspend the sale of MS & HSD products with immediate effect as per Clause-6.1.1(b) of the Marketing Discipline Guidelines, 2005 (in short, "MDG, 2005"). After failure of Marker test, the incharge. Industry Mobile lab along with Civil Supply Officer, Puri asked the Petitioner to produce the tank lorry sample for testing as per the 3-tire sampling procedure as laid down in MDG, 2005. However, the Petitioner did not keep tank lorry sample so ha could not produce MS & HSD tank lorry sample dated 19.5.2007 at the time of inspection on 25.5.2007. Therefore, the Petitioner was not permitted to test the tank lorry retention sample at a later stage as per Clause 2.5(F) of the guidelines. The second sample of the retail outlet along with supply location samples were fixed for testing on 1.6.2007 at Jatni Depot. The said fact was communicated to the Petitioner vide letter dated 28.5.2007 requesting him to remain present at Jatni Depot for witnessing the tests in spite of receipt of such letter. The Petitioner failed to appear at Jatni Depot on 1.6.2007 for witnessing the testing. Therefore, the company compared the retail outlet sample with supply point sample on 1.6.2007 & on testing of the samples, both the samples of Jatni Depot passed the Marker test. The nozzle samples of the retail outlet failed in the Marker test for both the products. Therefore, the show cause notice was issued. Instead of replying to the show cause notice, the Petitioner filed Writ Petition in W.P.(C) No. 7067 of 2007. After fling of the said Writ Petition, the Petitioner filed his show cause requesting once again to test the retention sample at the laboratory.
Therefore, the show cause notice was issued. Instead of replying to the show cause notice, the Petitioner filed Writ Petition in W.P.(C) No. 7067 of 2007. After fling of the said Writ Petition, the Petitioner filed his show cause requesting once again to test the retention sample at the laboratory. However, after receipt of the certified copy of the Order Dated 12.12.2007 passed by this Court in the said Writ Petition, the Deputy General Manager, who is the State head of the company for the State of Orissa, constituted a committee on 20.12.2007 comprising Senior Manager (Operation), Orissa State Office & Manager (Retail Sales), Indian Oil Corporation, Bhubaneswar Divisional Office to take possession of the sample from the Petitioner & inspect the same to establish the acceptance of the sample as tank truck retention sample of 19.5.2007 following the direction of this Court. The Committee asked the Petitioner to report on 2nd January, 2008 along with the samples he was willing to produce & the transporter was advised to report with the then driver of the tank truck that carried the load on 19.5.2007 to the retail outlet. Both the parties were present on 2.1.2008. They described the sequence of events that followed on 19.5.2007 from leaving Khurda Depot till unloading at the retail outlet. The Committee heard the statements of both, the Petitioner & the tank truck driver & took their statement in. writing. The said statement indicated that the dealer had taken retention sample in presence of the driver before unloading commenced. However, the statement of the driver indicted that the TT retention sample was not taken by the Petitioner/dealer as he was in a hurry to unload the tank truck & the signature on the sample was not his signature. The committee after examining the statement made by the Petitioner & the tank truck driver submitted their report to the Deputy General Manager on 2.1.2008 stating that it was very difficult on the part of the committee to establish the fact that the sample was produced by the dealer as the TT retention sample. Therefore, the same was not accepted & handed over to the dealer.
Therefore, the same was not accepted & handed over to the dealer. Thereafter, the Deputy General Manager vide letter dated 8.1.2008 informed the Petitioner that it was not possible on the part of the Indian Oil Corporation to accept the samples produced by the Petitioner as TT retention samples for testing & tallying/ verifying the results with the samples taken & tested from the Petitioner's retail outlet on 25.5.2007. Since the petroleum product taken from the Petitioner's outlet contravened various stipulation of the agreement dated 27.3.2007 & MDG-2005, the impugned notice was issued terminating the Dealership Agreement dated 27.3.2007. 11. From the above factual backdrops & submission of the Learned Counsel for the parties, it appears that the Opposit Parties company constituted a committee on 20.12.2007 after receipt of the certified copy of the Order Dated 12.12.2007 passed by this Court in W.P.(C) No. 7067 of 2007.The said committee, enquired into the matter taking into consideration the statement of the Petitioner as well as the driver of the tank truck, inspected alleged sample taken on 19.5.2007 from the outlet & submitted its report to the Deputy General Manager of Indian Oil Corporation who is the head of the Company in respect of the State. From the said report, it appears that the Petitioner had not retained the samples when the product was delivered at the retail outlet on 19.5.2007. 12. The terms & conditions of the agreement dated 27th March, 2007 at Clause 67 provides that any dispute or difference of any nature whatsoever or regarding any. right, liability, act, omission or account of any of the parties thereto arising out of or in relation to the said agreement shall be referred to the arbitration. Since the company has retained its rights to terminate the licence & permission granted by it to use the said premises & outlet, it shall terminate immediately on the termination of the agreement or on breach of any of the terms thereof. If the dealer shall deliberately contaminate or tamper with the quality of any of the Corporation's products as provided in the terms & conditions of the said agreement, the Petitioner has no right, title or interest in the said premises & is only entitled to leave & licence to enter the premises during the terms of the agreement. The Petitioner entered into the said agreement with an open eye.
The Petitioner entered into the said agreement with an open eye. Now he cannot turn around & say that he would not abide by the terms & conditions of the said agreement. In the present case, he has not been able to prove the act of the Opposite Parties as mala fide. The contention of the Petitioner is that he kept the sample in a sealed cover which had not been accepted by the Opposite Parties being a disputed question of fact, the same cannot be adjudicated in exercise of the jurisdiction under Article 226 of the Constitution of India. 13. Accordingly the Writ Petition is dismissed. No costs. The interim Order Dated 28.2.2008 passed by this Court stands vacated. 14. It is open to the Petitioner to invoke the arbitration clause of the agreement to resolve the dispute. I.M. Quddusi, A.C.J. 15. I agree. Final Result : Dismissed