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2013 DIGILAW 2321 (ALL)

SAVITA SHARMA v. UNION OF INDIA

2013-09-17

ASHOK BHUSHAN, VIPIN SINHA

body2013
JUDGMENT Hon’ble Ashok Bhushan, J.—The petitioners, who are running LPG Gas agency at Baraut, district Baghpat have come up in this writ petition challenging the show-cause notice issued by the Chief Regional Manager of the Hindustan Petroleum Corporation by which the petitioners’ supplies have been suspended and they have been asked to submit reply as to why necessary action be not taken against them. Counter-affidavit and rejoinder-affidavit have been exchanged between the parties and with the consent of learned counsel for the parties, the writ petition is being finally decided. 2. Brief facts of the case as emerged from pleadings of the parties are that a LPG gas agency was awarded to Smt. Shanti Devi, the wife of late Bireshwar Sharma, a freedom fighter on compassionate ground under the order dated 14.7.1987, issued by the Ministry of Petroleum and Natural Gas. By letter of intent dated 21.5.1988, LPG distributorship was awarded to Smt Shanti Devi, who was working as school teacher. Smt. Shanti Devi died on 4.1.1998. A fresh agreement dated 1.1.2000 was entered between the Corporation and Smt. Savita Sharma, the petitioner No. 1, the daughter of late Smt. Shanti Devi and Vivek Sharma, the petitioner No. 2, son of petitioner No. 1. The distributorship was reconstituted in the name of petitioner No. 3, a partnership firm with petitioner Nos. 1 and 2 as partners. The agreement has been renewed up to 1.1.2015. The Corporation had framed Market Discipline Guidelines namely; MDG 2001. Inspections were made of the petitioner’s premises in the year 2008, 2011, 2012 and 2013. On the basis of inspections dated 5.5.2011, 30.9.2011, a penalty of Rs. 6,78,300/- was imposed towards shortage of 266 cylinders of 19 KG by debit note dated 12.3.2012. On 26.3.2012, the petitioners wrote to the Corporation that they shall deposit 266 cylinders within a week. On 11.4.2012, the petitioner wrote to the Chief Regional Manager that 110 cylinders were with the parties without connections, who have been given new connections and 156 cylinders have been deposited on the plant hence, the debit note dated 12.3.2012 be cancelled. The petitioner also sent a complaint to the Deputy General Manager, New Delhi requesting for cancelling the debit note dated 12.3.2012, which complaint was forwarded by the Deputy General Manager to the Chief Regional Manager by letter dated 19.2.2013 and 4.3.2013. The petitioner also sent a complaint to the Deputy General Manager, New Delhi requesting for cancelling the debit note dated 12.3.2012, which complaint was forwarded by the Deputy General Manager to the Chief Regional Manager by letter dated 19.2.2013 and 4.3.2013. The respondent No. 5, Dharmpal Gupta was transferred to Loni and joined as Chief Regional Manager on 7.5.2012. On 20.6.2012, a debit note was again issued for an amount of Rs. 6,78,300/- which amount was deducted from the petitioner’s account namely; Refill Quota Account. On the basis of inspection dated 1.5.2012, by an order dated 28.2.2013 again penalty of Rs. 5,45,415/- was imposed on the petitioner. A debit note for the aforesaid amount was issued on 2.3.2013 and the amount was deducted from the aforesaid account of the petitioner. Again on 22.9.2012, inspection of the petitioner’s premises was made and by debit note dated 18.3.2012, penalty of Rs. 90,000/- was imposed and deducted from the account of the petitioner. Another inspection is claimed to be made on 11.1.2013 a show-cause notice dated 9.2.2013 was issued to the petitioner which was replied by the petitioner on 24.2.2013. The petitioner on 20.3.2013 filed a criminal complaint No. 1253 of 2013 against Dharmpal Gupta, Chief Regional Manager under Section 406 of the IPC. In the complaint allegations were made that criminal breach of trust was committed by the Chief Regional Manager in withdrawing the amount from the Refill Quota Account, which was meant only for payment towards refill supplied by the Corporation. Chief Judicial Magistrate by order dated 3.5.2013 summoned Dharmpal Gupta, the respondent No. 5 under Section 406 I.P. C. An application under Section 482 Cr.P.C. was filed by the respondent No. 5, being Criminal Misc. Application No. 1810 of 2013 in this Court, in which application by order dated 27.2.2013 proceedings of complaint case No. 1253 of 2013 has been stayed. The application under Section 482 Cr.P.C. is pending consideration in this Court. 3. The Chief Regional Manager issued a show-cause notice dated 18.6.2013 asking the petitioner to show case as to why action be not taken against the petitioner on account of discrepancies and irregularities committed as mentioned in the show-cause notice. By the same show-cause notice supplies of the petitioner were suspended exercising the power under Clause 29A of the agreement. 3. The Chief Regional Manager issued a show-cause notice dated 18.6.2013 asking the petitioner to show case as to why action be not taken against the petitioner on account of discrepancies and irregularities committed as mentioned in the show-cause notice. By the same show-cause notice supplies of the petitioner were suspended exercising the power under Clause 29A of the agreement. The petitioner received the show-cause notice on 21.6.2013 and immediately on 27.6.2013, he wrote a letter asking for relevant materials and evidences mentioned in the notice supplied to the petitioner to enable him to submit a reply. Time for submitting the reply was also prayed to be extended. On 28.6.2013, the petitioner again wrote to the Deputy General Manager, New Delhi as well as to the Chairman of the Corporation stating that the Chief Regional Manager has no jurisdiction to issue show-cause notice and issuance of the show-cause notice is illegal exercise of powers by the Chief Regional Manager. It was further stated that the Chief Regional Manager being accused in criminal case No. 1253 of 2013, the show-cause notice, issued by him be set aside. On 29.6.2013, the petitioner raised various preliminary objections to the show-cause notice dated 18.6.2013, which were sent to the Deputy General Manager as well as to the Chairman of the Corporation. Copy of the said preliminary objections have been filed as Annexure-12 to the writ petition. The petitioner in his objection has submitted that Chief Regional Manager has taken action against the petitioner due to personal grudge and issuance of the show-cause notice is a mala fide exercise of power. It was further stated that show-cause notice is in substance a pre-decision of all the issues by the Chief Regional Manager. It was stated in the objections that power to suspend the supplies can be exercised only by the Zonal Officer and exercise of such power by the Chief Regional Manager is contrary to the Marketing Discipline Guidelines, 2001. The petitioner submitted preliminary objections reserving his right to file detailed reply after receipt of the materials as prayed for. It was stated in the objections that power to suspend the supplies can be exercised only by the Zonal Officer and exercise of such power by the Chief Regional Manager is contrary to the Marketing Discipline Guidelines, 2001. The petitioner submitted preliminary objections reserving his right to file detailed reply after receipt of the materials as prayed for. This writ petition was filed by the petitioner on 4.7.2013 challenging the show-cause notice/order dated 18.6.2013 with the following prayers: “(i) issue a writ, order or direction in the nature of certiorari quashing the impugned order of suspension dated 18.6.2013 incorporated in the show-cause notice dated 18.6.2013 passed by respondent No. 5, Dharmpal Gupta, Regional Manager as well as to quash notice itself (Annexure 10 to the writ petition). (ii) issue a writ, order or direction in the nature of mandamus directing the respondents to resume the supply of LPG Gas Cylinder to the petitioner Gas Agency distributorship because as nearly 12000 consumer/customers are affected by the illegal act of respondents regarding suspending supply of Gas Cylinders. (iii) issue a writ, order or direction in additional to above, to direct the respondents to consider the request/prayer/application/objection dated 27.6.2013, 28.6.2013 and 29.6.2013 as preliminary objections and to provide to transfer the proceeding before some higher officer other than the respondent No. 5 and to give opportunity to submit reply as well as hearing; (iv) issue any other suitable writ, order or direction as this Hon’ble Court may deem fit and proper under the facts and circumstances of the case.” 4. A short counter-affidavit and detailed counter-affidavit have been filed by the Corporation. In the detailed counter-affidavit, the allegations made against the petitioner in the show-cause notice have been reiterated. It has been stated in the counter-affidavit that under clause 39 of the agreement dated 1.1.2000, there is an arbitration clause under which the petitioner can seek remedy hence, the writ petition be not entertained. It has been pleaded in the counter-affidavit that there has been complaints against the petitioner and various inspections were held on 25.9.2008, 8.9.2010, 1.11.2011, 5.5.2011, 30.9.2011, 1.5.2012 and lastly on 11.1.2013. It has further been stated that the necessary approval has been taken from the respondent No. 3 i.e. Deputy General Manager for issuing the show-cause notice dated 18.6.2013. The supplies of the petitioner have been suspended in terms of clause 29A of the dealership agreement dated 1.1.2000. It has further been stated that the necessary approval has been taken from the respondent No. 3 i.e. Deputy General Manager for issuing the show-cause notice dated 18.6.2013. The supplies of the petitioner have been suspended in terms of clause 29A of the dealership agreement dated 1.1.2000. It has been stated that on a complaint that petitioner is working as a teacher, inquiries were made and it was found that the petitioner is working as Head Mistress in an institution run by the U.P. Basic Siksha Parishad hence, she has violated clause 24(c)(ii) of terms and conditions of the agreement. 5. We have heard Sri Gajendra Pratap, leaned Senior Advocate assisted by Sri Raghuraj Kishore for the petitioners and Sri Vikas Budhwar, learned counsel appearing for the respondent Corporation. 6. Learned Counsel for the petitioners challenging the order dated 18.6.2013 has raised various submissions which are to the following effect: 1. Before suspending the supplies to the petitioner, an opportunity/notice was required to be given. The order exercising powers under clause 29A of the agreement cannot be exercised without giving an opportunity to the petitioner. He submitted that in the facts of the present case, where allegations are being made that the petitioner No. 1 was not eligible to carry on a distributorship, she being in employment since 3.3.1972, it was more necessary to give opportunity. 2. The Chief Regional Manager, who has issued the order dated 18.6.2013 has no jurisdiction to suspend the supplies or to take any action. Proceedings for termination of the agreement ougt to have been initiated at zonal level i.e. Deputy General Manager. The order dated 18.6.2013 having not been passed by Deputy General Manager, the said order is without jurisdiction. 3. The petitioner had filed complaint against the Chief Regional Manager for setting aside the debit note dated 12.3.2012 of Rs. 6,78,300/-, which was imposed on account of shortage of 266 cylinders on the ground that 156 cylinders have already been deposited in the plant and for 110 cylinders new connections were given. Inspite of submitting explanation for shortage of 366 cylinders debit note was not cancelled and amount was deducted. The complaints were filed before the Deputy General Manager which was forwarded to the Chief Regional Manager on 19.3.2013 and 4.3.2013 for consideration due to which the Chief Regional Manager had personal grudge against the petitioner. Inspite of submitting explanation for shortage of 366 cylinders debit note was not cancelled and amount was deducted. The complaints were filed before the Deputy General Manager which was forwarded to the Chief Regional Manager on 19.3.2013 and 4.3.2013 for consideration due to which the Chief Regional Manager had personal grudge against the petitioner. The petitioner filed complaint under Section 406 IPC on 20.3.2013 on which Chief Regional Manager Dharmpal Gupta was summoned by Chief Judicial Magistrate by order dated 3.5.2013. Thereafter the Chief Regional Manager became biased and prejudiced with the petitioner which resulted in initiating proceedings for suspension of supplies and proceedings for termination of the agreement. It is submitted that the order dated 18.6.2013 is actuated by personal bias of Chief Regional Manager Dharmpal Gupta which vitiates the entire action. 4. There is no violation of clause 24(c)(ii) of the agreement since the petitioner No. 1 was working as teacher before the execution of the agreement in her favour on 1.1.2000. Clause 24(c)(ii) is applicable when a person takes any employment or engage in any other business after grant of dealership. 5. The allegations that Smt. Shanti Devi, the mother of the petitioner, who was granted dealership on 21.5.1988 was also not eligible since she was working as teacher at that time cannot be a ground for taking action against the petitioner. Smt. Shanti Devi having died in the year 1998 and thereafter fresh agreement having already been entered on 1.1.2000, it is submitted that taking such ground questioning the grant of dealership to the mother of the petitioner and further raising issues regarding age of the mother of the petitioner and age of the petitioner No. 1 are the grounds which indicate that the said grounds have been included in the show-cause notice due to personal grudge and bias of Chief Regional Manager. 6. The discrepancies and irregularities which have been made grounds in the show-cause notice have already been taken care of since necessary direction for payment on the basis of inspections were carried out and the penalty imposed have already been recovered. 7. Sri Vikas Budhwar, learned Counsel for the respondent, refuting the submissions of learned Counsel for the petitioner contended that the petitioner having remedy under clause 39 of the agreement to request for arbitration, the writ petition be not entertained. 7. Sri Vikas Budhwar, learned Counsel for the respondent, refuting the submissions of learned Counsel for the petitioner contended that the petitioner having remedy under clause 39 of the agreement to request for arbitration, the writ petition be not entertained. He submits that the alternate remedy having been provided by arbitration clause 39, the writ petition is to be dismissed on this ground alone. He further submitted that there is no requirement of giving any notice or opportunity before exercising the powers under clause 29A for suspending the supplies. It is submitted that supplies can be suspended when the Corporation is satisfied that any breach of covenant has been committed by the dealer. Replying to the submissions of learned Counsel for the petitioner that the Chief Regional Manager has no jurisdiction to exercise power under clause 29A or to issue show-cause notice, It has been submitted that approval has been taken of the Deputy General Manager for issuing show-cause notice and for suspending the supplies which is sufficient compliance of Marketing Discipline Guidelines, 2001. He submits that it is not necessary that order be passed by the Deputy General Manager for suspending the supplies or issuing a show-cause notice and on approval of action, Chief Regional Manager is fully justified to issue show-cause notice and to suspend the supplies. The allegations of bias as against the respondent No. 5 has been denied. It is submitted that action has been taken on the basis of complaint and inspections and the allegations of bias are wholly incorrect and have not been substantiated by any material on record. Referring to clause 24(c)(ii) of the agreement, it is submitted that said clause prohibits carrying of any employment or business by a dealer even though the dealer was carrying such employment or business since prior to grant of dealership. It is submitted that clause cannot be given a restrictive interpretation as contended by learned Counsel for the petitioner. He further supported the grounds taken in the show-cause notice and submitted that the writ petition be dismissed. 8. Learned Counsel for the parties have placed reliance on various judgements of the Apex Court in support of their respective submissions, which shall be referred to while considering the submissions in detail. He further supported the grounds taken in the show-cause notice and submitted that the writ petition be dismissed. 8. Learned Counsel for the parties have placed reliance on various judgements of the Apex Court in support of their respective submissions, which shall be referred to while considering the submissions in detail. From the pleadings of the parties and the submissions made by learned Counsel for the parties, following are the issues which arise for consideration in the present case: 1. Whether in view of clause 39 of the agreement which contains an arbitration clause, the present writ petition is not maintainable and is to be dismissed on the ground of alternate remedy? 2. Whether the order for suspending the supplies and issuing show-cause notice has to be passed by the Deputy General Manager according to the Marketing Discipline Guidelines, 2001 or the same can be passed by Chief Regional Manager with the approval of Deputy General Manager? 3. Whether the order dated 18.6.2013 has been passed in accordance with the provisions of Marketing Discipline Guidelines, 2001? 4. Whether for exercising powers under clause 29A of the agreement, before suspending the supplies an opportunity to the dealer is a must and order suspending the supplies passed without opportunity is to be set aside on the ground of violation of principle of natural justice? 5. Whether the action taken by the Chief Regional Manager Dharmpal Gupta in issuing show-cause notice and suspending the supplies was actuated by bias ? 6. Whether clause 24(c)(ii) of the agreement applies in a case where a distributor is already continuing in employment/business or the same shall apply only when employment or business is taken subsequent to the grant of dealership? 7. Whether violation of distributorship agreement by first dealership agreement signatory Smt. Shanti Devi can be a relevant ground for suspending the supplies of the petitioner and issuing a show-cause notice for taking action for violation of agreement against the petitioner? 8. Whether in the facts and circumstances of the present case, the respondents have rightly invoked their power under clause 29A of the agreement for suspending the supplies? 9. To what reliefs, the petitioners are entitled in this writ petition ? 9. 8. Whether in the facts and circumstances of the present case, the respondents have rightly invoked their power under clause 29A of the agreement for suspending the supplies? 9. To what reliefs, the petitioners are entitled in this writ petition ? 9. At the very outset Sri Vikas Budhwar, learned Counsel for the respondent Corporation submitted that in view of clause 39 of the Agreement which provides that any dispute or difference of any nature whatsoever or regarding any rights, 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 sole arbitrator of the Managing Director of the Corporation, the writ petition cannot be entertained and is to be dismissed on the ground of alternative remedy. 10. Copy of the agreement has been filed as Annexure-3 to the writ petition which contains an arbitration clause i.e. clause 39. There cannot be any dispute that agreement contains an arbitration clause and ordinarily all disputes are to be raised before the Arbitrator. Learned Counsel for the petitioner refuting the contentions raised by learned Counsel for the respondent, contended that even though there is an arbitration clause, the present is not a case where the petitioner can be relegated to avail alternative remedy. It is contended by learned Counsel for the petitioner that the writ petition has been filed on the ground that the Chief Regional Manager has no jurisdiction to issue the impugned show-cause notice and suspend the supplies. The challenge being to the very jurisdiction of the Chief Regional Manager, the writ petition cannot be thrown out on the ground of alternative remedy. Further submission is that before suspending the supplies, an opportunity was required to be given to the distributor and since the order has been passed without affording any opportunity to the petitioner to show-cause against the suspension of supplies, the writ petition is to be entertained on account of violation of principles of natural justice. To meet the plea of alternative remedy, learned Counsel for the petitioner submitted that the action impugned has been taken by the Chief Regional Manager on account of his personal bias against the petitioner hence, the impugned action is to be set aside on account of violation of principles of natural justice. To meet the plea of alternative remedy, learned Counsel for the petitioner submitted that the action impugned has been taken by the Chief Regional Manager on account of his personal bias against the petitioner hence, the impugned action is to be set aside on account of violation of principles of natural justice. It is submitted that the petitioner having filed a criminal complaint against the Chief Regional Manager Dharmpal Gupta in which the Chief Regional Manager was summoned by Chief Judicial Magistrate on 3.5.2013, the respondent No. 5 became biased and immediately initiated proceeding for suspending the supplies and initiating proceedings for cancellation of agreement. 11. There cannot be any dispute to the proposition that when an efficacious alternative remedy is available to a party, the writ Court shall not entertain the writ petition. However, to the above principle certain exceptions have been well recognised. The Apex Court had occasion to consider similar plea in Harbans Lal Sahnia v. Indian Oil Corporation, (2003) 2 SCC 107 . In the said case, the writ petition under Article 226 of the Constitution of India was filed by a dealer of Indian Oil Corporation, whose licence was cancelled. The writ petition was dismissed on the ground that the petitioner should take recourse to the arbitration clause. The dealer filed Special Leave Petition before the Apex Court. The Apex Court reversed the judgment of the High Court and laid down that the writ petition can be entertained where there is violation of principles of natural justice or where action taken is without jurisdiction. The Apex Court laid down following in paragraph 7: “7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case inspite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the Fundamental Rights; (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act and is challenged [See Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others, (1998) 8 SCC. The present case attracts applicability of first two contingencies. Moreover, as noted, the petitioners’ dealership, which is their bread and butter came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings.” 12. Law laid down by the Apex Court in the above case fully supports the contention of learned Counsel for the petitioner and in the facts of the present case and on the grounds of challenge raised to the impugned action, we are of the view that the writ petition need not be thrown out on the ground of alternative remedy and this Court is to examine the grounds of challenge raised by the petitioner which goes to very root of the matter. 13. Sri Vikas Budhwar in support of his submission has placed reliance on the judgment of the Apex Court in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums, (2003) 6SCC 503. In the aforesaid case, the suit was filed by the dealer against an order of Corporation stopping the supply. Interim injunction was granted in favour of the dealer. The Corporation filed a written statement and also filed an application for referring the matter to the Arbitrator in accordance with the provisions of Arbitration and Conciliation Act, 1996 relying on clause 40 of the agreement which provided for arbitration clause. Learned Civil Judge rejected the application holding that the dispute is not covered by clause 40 of the Arbitration Clause. Revision filed before the High Court was also dismissed. The matter was taken up before the Apex Court by the Corporation. Learned Civil Judge rejected the application holding that the dispute is not covered by clause 40 of the Arbitration Clause. Revision filed before the High Court was also dismissed. The matter was taken up before the Apex Court by the Corporation. In the above context, the Apex Court laid down that the dispute was covered by clause 40 and learned Civil Judge ought to have referred the matter to the Arbitrator as the language of Section 8 was peremptory in nature. It is useful to quote the relevant paragraphs of the judgment i.e. paragraphs 8, 9, 13 and 14. 8. In reply to the plaint filed in the Civil Judge’s Court, the appellant filed an application under Section 8 read with Section 5 of the Act in the said suit praying for referring the dispute pending before the Civil Court to the arbitrator as per Clause 40 of the Dealership Agreement dated 26.3.1997. Alongwith that application, as required under Section 8 of the Act, the appellant also enclosed a copy of the agreement. In the said application, the appellant had stated that the action taken by it was in consonance with the terms and conditions of the Dealership Agreement, hence, any dispute arising out of the said action of the appellant could only be referred to the arbitrator as per Clause 40 of the said agreement. 9. The learned Civil Judge by his order dated 19.2.2002 dismissed the said application holding that the dispute between the parties was not covered by the arbitration agreement. A revision filed by the appellant in the High Court, as stated above, against the order of the learned Civil Judge came to be dismissed by the High Court. It is in the above backdrop that the appellant is before us in this appeal. 13. A perusal of this clause clearly shows that the parties to the Dealership Agreement had agreed to refer their dispute arising out of the agreement, of whatever nature it may be, to an arbitrator as contemplated in that agreement. Section 8 of the Act in clear terms mandates that a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement to refer such parties to arbitration, the language of this Section in unambiguous. 14. Section 8 of the Act in clear terms mandates that a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement to refer such parties to arbitration, the language of this Section in unambiguous. 14. This Court in the case of P. Anand Gajapathi Raju and others v. P.V.G. Raju (Dead) and others, has held that the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the Civil Court, there is a clause for arbitration, it is mandatory for the Civil Court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the agreement is accepted by both the parties as also by the Courts below but the applicability thereof is disputed by the respondent and the said dispute is accepted by the Courts below. Be that as it may, at the cost of repetition, we may again state that the existence of the arbitration clause is admitted. If that be so, in view of the mandatory language of Section 8 of the Act, the Courts below ought to have referred the dispute to arbitration. 14. There cannot be any dispute to the proposition of law as laid down by the Apex Court in the above case. The order stopping the supply of a dealer is covered by the arbitration clause. It is not the contention of the petitioner in the present case that the dispute is not covered by clause 39 of the agreement dated 1.1.2000 rather submission of the petitioner is that in view of the facts of the present case and grounds taken in the writ petition, the present is a case of exception which have been carved out by the Apex Court for entertaining a writ petition under Article 226 of the Constitution of India. In the case of Hindustan Petroleum Corpn. In the case of Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums (supra), the issue was not as to whether the writ petition is maintainable against such order rather the issue was as to whether the Civil Court was obliged to make a reference to the Arbitrator as required by Section 8 of the Arbitration and Conciliation Act, 1996. Thus, the above case was on its own facts and does not help the respondents in the present case. 15. The next submission which has been pressed by learned Counsel for the petitioner for challenging the order dated 18.6.2013 is that the order has been passed by the Chief Regional Manager, who had no authority or jurisdiction to suspend the supplies and power is vested in the Zonal Authority ie. Deputy General Manager to either suspend the supply or issue show-cause notice for taking action for terminating the agreement. Sri Vikas Budhwar, learned Counsel for the respondent refuting the submissions contended that Marketing Discipline Guidelines, 2001 contains the relevant provisions in context of termination procedure/suspension of supplies. He has further referred to the relevant paragraphs of Limits of Authority Manual ‘which have been filed as Annexure-25 to the counter-affidavit. Before we proceed to consider the submission any further, it is pertinent to notice the relevant provisions of Marketing Discipline Guidelines, 2001. The petitioner has annexed a copy of the relevant extract of Marketing Discipline Guidelines, 2001 as Annexure-5 to the writ petition. Paragraph 4.3 provides for termination procedure. Paragraph 4.3 is quoted as below: “4.3 TERMINATION PRODECURE Distributorship is terminated in the following circumstances: (i) Violation in terms of LPG Distributorship Agreement and/or violation under Marketing Discipline Guidelines. (ii) Resignation of distributor (iii) Death of a partner or proprietor 4.3.1 Before the proposal of termination is initiated, Regional Office concerned should take following steps: (i) identifying alternative arrangements for serving customer through other distributors from same market of adjoining or nearest market. (ii) A surprise inventory is to be carried to assess the loss, if any, and short remittance of SV deposits. (iii) The statement of Account should be reconciled to assess and check on the status regarding credit/debit. (iv) Customer register unused SV/TV/CTA stationary and connected documents should be collected. The above steps are desirable to ensure Corporation’s interests protected. (ii) A surprise inventory is to be carried to assess the loss, if any, and short remittance of SV deposits. (iii) The statement of Account should be reconciled to assess and check on the status regarding credit/debit. (iv) Customer register unused SV/TV/CTA stationary and connected documents should be collected. The above steps are desirable to ensure Corporation’s interests protected. However they should not be deemed as a prerequisite to termination in the event complying with the same may inordinately delay the action of termination. 4.3.2 The resignation letter from the distributor should be accepted by the Corporation in writing after necessary steps have been taken to safeguard Corporation’s interest. 4.3.3 On death of a partner or proprietor the distributorship agreement becomes null and void. Supplies if at all to be continued, it should be only on adhoc basis. This should be specifically conveyed to the distributorship and reconstitution proposal should be processed at the earliest. 4.3.4 Approving authority for issuance of show-cause notice, termination of distributorship agreement or acceptance of resignation as per LAM Chapter II Sales Para 11 is as following: For SC/ST Distributorship Director Marketing Others Head Zone” 16. The submission of Sri Gajendra Pratap, learned Senior Advocate is that any action for suspension of supply or issuing show-cause notice for termination of agreement is to emanate from the Zonal Authority, who is authority competent to take action. He submits that neither the Chief Regional Manager can initiate above action nor can issue an order, whereas Sri Budhwar, learned Counsel for the respondent Corporation submits that the proposal can be submitted by Chief Regional Manager however, action can be initiated or taken only with the approval of the zonal authority. He submits that it is not necessary for zonal authority to issue an order in above regard and there is no lack of jurisdiction in Chief Regional Manager to issue an order/show-cause notice subject to approval of action by the Zonal Authority. Paragraph 4.3.1 provides “before the proposal of termination is initiated, the Regional Office should take following steps”. Further paragraph 4.3.4 provides that “approving authority for issuance of show-cause notice, termination of distributorship agreement or acceptance of resignation......” Use of the words “before the proposal of termination is initiated” and “approving authority” indicate that proposal may emanate from the Chief Regional Manager however, approving authority for such action is the Head Zone. Further paragraph 4.3.4 provides that “approving authority for issuance of show-cause notice, termination of distributorship agreement or acceptance of resignation......” Use of the words “before the proposal of termination is initiated” and “approving authority” indicate that proposal may emanate from the Chief Regional Manager however, approving authority for such action is the Head Zone. The scheme thus, clearly indicates that although proposal can be submitted by the Chief Regional Manager but action can be initiated only with the approval of Head Zone. The approving authority is empowered to approve the action. 17. The submission which however, has been pressed is that the order impugned does not indicate that the said order has been passed with the approval of the Deputy General Manager. A perusal of the order dated 18.6.2013 does not indicate or mention that the said order has been issued with the approval of Deputy General Manager. In the counter-affidavit, it has been pleaded that final approval to the suspension of the petitioner’s distributorship was accorded by the Deputy General Manager on 18.6.2013. It is further pleaded that the authority to sign the agreement and to issue the show-cause notice is the Chief Regional Manager, who is also duly constituted attorney. In the counter-affidavit, the order of Deputy General Manager approving the action has not been brought on record. There is no further detail mentioned in the counter-affidavit except that approval was accorded on 18.6.2013. Sri Budhwar, learned Counsel for the respondent Corporation during course of hearing has passed on to the Court a photostat copy of the document title “FILE NOTE”, which mentions according of approval for issue of show-cause notice and for suspension of supplies as per clause 29A. File Note however, has neither been given to the learned Counsel for the petitioner nor shown to him. From the aforesaid discussions, it is clear that position which emerged from the Marketing Discipline Guidelines, 2001 is that approving authority for suspension of supplies and for initiating proceedings for termination of agreement is the Deputy General Manager. No exception can be taken to the issuance of the order by Chief Regional Manager provided the Zone Head has applies his mind and has approved the action. One more relevant facts may be noted. No exception can be taken to the issuance of the order by Chief Regional Manager provided the Zone Head has applies his mind and has approved the action. One more relevant facts may be noted. After receiving the order dated 18.6.2013, the petitioner immediately submitted a representation to the Deputy General Manager dated 28.6.2013 in which the jurisdiction to issue show-cause notice by Chief Regional Manager was challenged. The letter dated 28.6.2013 submitted by the petitioner has been replied by the Deputy General Manager on 5.7.2013, copy of which letter has been brought on record as Annexure-CA-27 of the counter-affidavit. In second paragraph of the letter dated 5.7.2013, although Deputy General Manager has stated that Chief Regional Manager has jurisdiction to issue show-cause notice but there is no averment that approval was granted by the Deputy General Manager. The petitioner has also filed a detailed preliminary objection on 29.6.2013 which was sent to the Chairman of the Corporation as well as to the Deputy General Manager. In view of the fact that relevant materials are not brought on record by the Corporation regarding entire process of obtaining the approval and further the order approving the action has not been brought on record, we are of the view that the issue need to be examined by the Chairman/Managing Director to whom the above objections have already been sent by the petitioner by letter dated 29.6.2013 Annexure-12. The issues No. 2 and 3 are answered accordingly. 18. The next submissions raised by learned Counsel for the petitioner is that before issuing the order suspending the supplies in exercise of power under clause 29A an opportunity of hearing to the distributor is a must. Clause 29-A of the agreement is as follows: “29A. Notwithstanding anything to the contrary herein contained, the Corporation shall be at liberty, upon their being satisfied of any breach of any covenant committed by the dealers of this Agreement, to stop and/or suspend sales for such period or periods as the Corporation may think fit. Such right of stoppage and/or suspension shall be in addition to and/or without prejudice to any other right or remedy available to the Corporation under this Agreement. The dealer shall not be entitled to claim any compensation or damage from the Corporation on account of any such stoppage and/or suspension of supply.” 19. Such right of stoppage and/or suspension shall be in addition to and/or without prejudice to any other right or remedy available to the Corporation under this Agreement. The dealer shall not be entitled to claim any compensation or damage from the Corporation on account of any such stoppage and/or suspension of supply.” 19. Clause 29A begins with non obstante clause “Notwithstanding any thing to the contrary herein contained”. The next phrase used in the clause 29A is “Corporation shall be at liberty, upon their being satisfied of any breach of any covenant committed by the dealers of this agreement, to stop and/or suspend sales.” The pre-condition in exercise of power under Clause 29A is that upon their being satisfied of any breach. The last sentence of clause 29A to the effect that “.... dealer shall not be entitled to claim any compensation or damage from the Corporation on account of any such stoppage and/or suspension of supply” further indicates that no damage or compensation can be claimed by a dealer on account of stoppage or suspension of supply. The power to suspend the supply is a special power given under an agreement to the Corporation. Reading of various clauses of the agreement and scheme as delineated by clause 29A does not indicate that before suspending or stopping the supply, the Corporation has to give an opportunity to the dealer and the action taken for stoppage or suspension of supplies without notice shall be vitiated. However, there cannot be read any prohibition in clause 29A in giving an opportunity or for seeking any clarification, if Corporation so deem it fit, no obligation can be read under clause 29A on the Corporation to necessarily give a notice before stopping/suspending the supplies. Thus, the submission of the petitioner that order of suspending supplies is vitiated on account of not giving notice or opportunity, cannot be accepted. 20. The next submission pressed by learned counsel for the petitioners is that the proceedings for termination of dealership and suspension of supply has been undertaken against the petitioner on account of personal bias of Chief Regional Manager, Sri Dharampal Gupta. 21. Learned counsel for the petitioner submits that the Chief Regional Manager Sri Dharampal Gupta has deducted the amount of Rs. 6,78,300/- by debit note dated 20.6.2012 from refill quota of the petitioners. 21. Learned counsel for the petitioner submits that the Chief Regional Manager Sri Dharampal Gupta has deducted the amount of Rs. 6,78,300/- by debit note dated 20.6.2012 from refill quota of the petitioners. The said deduction was on account of shortage of 266 cylinders of 90 kg. Petitioners had earlier written on 11.4.2012 that 110 cylinders were with the parties who were not issued the connections by that time and 156 cylinders were deposited with the plant by the petitioners, hence, debit note dated 20.6.2012 for releasing of amount of Rs. 6,78,300/- be cancelled. 22. Petitioners had filed a complaint in the above regard alleging that the aforesaid amount has been wrongly deducted from the petitioners’ account and petitioners having explained the shortage of 266 cylinders, the amount should have been refunded/adjusted. Petitioners’ case is that the said complaints were taken notice by the Deputy General Manager and the complaints were forwarded to Chief Regional Manager by letter dated 19.2.2013 (Annexure-6 to the writ petition) and by letter dated 4.3.2013 (Annexure-7 to the writ petition). 23. Petitioners’ further case is that when inspite of petitioner having satisfactorily explained the shortage of 266 cylinders no action was taken by the Chief Regional Manager, on the complaint of the petitioner, a criminal Complaint No. 1253 of 2013 was filed by the petitioners against Sri Dharampal Gupta on 20.3.2013,on which complaint, after recording the statement under Sections 200 and 202 Cr.P.C. Sri Dharampal Gupta was summoned by Chief Judicial Magistrate vide order dated 3.5.2013. As soon as the said order 3.5.2013 summoning Sri Dharampal Gupta was received, Sri Dharampal Gupta initiated action of terminating the dealership and suspension of supply. 24. Petitioners’ case is that due to filing of criminal complaint and summoning of Sri Dharampal Gupta, he was prejudiced and biased with the petitioners leading to an action of suspending the supply and initiation of proceedings for termination of dealership. 25. As observed above, no details regarding proceedings for approval of action initiated by Chief General Manager having been brought on record by the Corporation, the Court cannot record any definite finding on the aforesaid aspect. 25. As observed above, no details regarding proceedings for approval of action initiated by Chief General Manager having been brought on record by the Corporation, the Court cannot record any definite finding on the aforesaid aspect. The petitioners in their preliminary objection dated 26.6.2013, Annexure-12 to the writ petition having taken the allegation of bias against Sri Dharampal Gupta, Chief Regional Manager, it is appropriate that the Chairman of the Corporation may also look into the said grounds raised in the objection and take appropriate decision in the above context. The issue No. 5 is decided accordingly. 26. Issue No. 6 is with regard to applicability of Clause 24(C)(II) of the agreement. There is no dispute that the petitioner No. 1 Smt. Savita Sharma was working as teacher in an institution run by U.P. Basic Education Board since 3.3.1972. Smt. Savita Sharma has retired from the said service on 30.6.2013 which is also on the record. Clause 24(C)(II) of the agreement is to the following effect: “24(C) Except with the previous written consent of the Corporation. (I) ..................................... (II) The Dealer himself (if he is an individual) or the partners themselves (if the Dealer is a partnership firm or the whole time Office Bearers/Elected Members if the Dealer is a Co-operative Society) shall not, (without prior permission in writing of the Corporation) take up any other employment or engage in any other business part from the operation of the dealership which is the subject-matter of this agreement.” 27. In the show-cause notice dated 18.6.2013, one of the grounds taken was that Smt. Savita Sharma has willfully breached the distributorship agreement by concealing that she being working with U.P. Education Board has contravened Clause 24(C)(II) of the agreement dated 25.1.2010, initial letter of intent and advertisement’s terms and conditions. The allegation is that the petitioner having continuing in employment as a teacher has breached the distributorship agreement. 28. The submissions which have been pressed by learned counsel for the petitioners is that the provision under Clause 24(C)(II) is applicable when an employment/engagement is undertaken after the execution of agreement. He submits the fact that Smt. Savita Sharma was continuing employment as teacher since before the agreement cannot be treated to violate Clause 24(C)(II). 29. Per contra, Sri Vikas Budhwar submits that the provisions under Clause 24(C)(II) shall apply both with regard to earlier employment as well as an employment taken thereafter. He submits the fact that Smt. Savita Sharma was continuing employment as teacher since before the agreement cannot be treated to violate Clause 24(C)(II). 29. Per contra, Sri Vikas Budhwar submits that the provisions under Clause 24(C)(II) shall apply both with regard to earlier employment as well as an employment taken thereafter. The issue pertains to interpretation of Clause 24(C)(II). 30. Learned counsel for the petitioners in support of his submission has placed reliance on a judgement of a Division Bench of Gujrat High Court dated 11.8.2010 in Letters Patent Appeal No. 1460 of 2010; Hamidabegam M Sheikh Meghani Indane and others v. Indian Oil Corporation Ltd. 31. In the aforesaid case, an agreement was reached between the petitioners and corporation on 29.12.2002 for dealership of L.P.G. in different areas of Ahmedabad. After 11 years, on the basis of a complaint, a show-cause notice was issued alleging that petitioner had violated Clause 23(C)(II) and Clause 27(I) and (m). The main allegation was that the petitioner was in employment and the same was in violation of the provisions of distributorship agreement. 32. On the above ground, the dealership was terminated. Writ petition was filed, which was dismissed by learned Single Judge. Letters Patent Appeal was allowed by a Division Bench. Clause 23(C)(II), which was considered in the said judgement is similar to clause Clause 24(C)(II) as in the present case. 33. A Division Bench of Gujarat High Court interpreting the said Clause 23(C)(II) held that the said clause relates the future employment or future business. Hence, the appeal was allowed. It is useful to quote paragraph No. 3, 9 and 10 of the said judgement which are as follows: “3. In the year 2002, the first petitioner for smooth running of the business intended to induct two partners by making it a partnership firm and the same was accepted by the Corporation. A fresh agreement was reached between the Corporation and the partnership firm M/s Meghani Indane, the second petitioner herein, on 29.12.2002. After 11 years, on the basis of a complaint, a show-cause notice was issued on the first petitioner. It was alleged that the first petitioner violated the provisions of Clauses 23(c)(ii) and Clause 27(I) and (m) of the dealership agreement dated 29.12.2002. The main allegation was that the first petitioner was in employment and the same was in violation of the provisions of the distributorship agreement above said. It was alleged that the first petitioner violated the provisions of Clauses 23(c)(ii) and Clause 27(I) and (m) of the dealership agreement dated 29.12.2002. The main allegation was that the first petitioner was in employment and the same was in violation of the provisions of the distributorship agreement above said. 9. It is not in dispute that the first petitioner was working as a substitute teacher in one of the schools while the application for distributorship was filed in the year 1998. On the basis of such application, the distributorship was granted in favour of the first petitioner, but subsequently on her request, the distributorship was allotted in favour of the partnership firm, M/s Meghani Indane. The main allegation is breach of Clause23(c)(ii) and Clause 27(I) and (n) of the agreement dated 29.12.2002. Under Clause 23, the distributor is supposed to undertake faithful performance. Under sub-clause(c)(ii) of Clause 23, the distributor was not supposed to take up any employment or engage in any other business without prior permission in writing of the Corporation, which reads as follows: “23(C) Except with the previous written consent of the Corporation. (I) ..................................... (II) The Distributor himself (if he is an individual) or the partners themselves (if the Distributor is a partnership firm) or the whole time Office Bearers/Elected Members (if the Distributor is a Co-operative Society) shall not, (without prior permission in writing of the Corporation) take up any other employment or engage in any other business apart from the operation of the distributorship which is the subject-matter of this agreement.” 10. Under Clause 27, the Corporation is empowered to terminate the agreement on certain events. The relevant provisions of Clause 27(a), (I) and (n) are quoted hereunder: 27. Termination of agreement.—Notwithstanding anything to the contrary herein contained, the Corporation shall also be at liberty at its entire discretion to terminate this Agreement forthwith upon or at any time after the happening of any of the following events, namely : (a) If the Distributor shall committee a delay, breach or default of any of the terms, conditions, 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. (I) If any information given by the Distributor in his application for appointment as a Distributor shall be found to be untrue or incorrect in any material particular; (n) If the Distributor shall either by himself or by his servants or agents commit or suffer to be committed any act which, in the opinion of the State Office in Charge of the Corporation for the time being at Ahmedabad in the state office of Gujarat of the Corporation whose decision in that behalf shall be final, is prejudicial to the interest or good name of the Corporation or its products; the State Office in Charge shall not be bound to give reasons for such decision.” From clause 23(c)(ii), it will be evident that the Clause relates to future employment or future business. After grant of distributorship, the distributor including the partners are not supposed to take any other employment or business without prior permission of the Corporation, it does not relate to the person is already in employment. 34. However, since we have already observed above that the petitioners have already filed objection on 29.6.2013 praying for revocation of suspension and show-cause notice, the said ground taken by the petitioners in objection may also be considered by the Managing Director and Chairman to whom preliminary objection have also been sent. 35. Now coming to the issue Nos. 7 which pertains to the ground No. B i.e. “Violation of Distributorship Agreement by first dealership agreement signatory Smt. Shanti Devi.” 36. The ground B of the notice was that Smt. Shanti Devi who was granted letter of intent on 31.5.1988 was also employed as a teacher since 1964. It is useful to quote allegations in the show-cause notice regarding above ground which were in following words: “...Therefore Service Book record established that Smt. Shanti Devi was working as Government Assistant Teacher, Bagpat. She has joined education department on 20.10.1964. Her date of birth as per service book was 20.8.1940. She had served the department from 20.10.1964 to 4.1.1998. Service record also proves that she expired on 4.1.1998 which is also in line with death certificate available with HPCL. This is nothing but is violation of LOI terms and condition Nos. 5 (d) and 5 (e) and also first dealership agreement clause 24 (c) (ii) entered between Shanti Devi and HPCL on 7.11.1988.” 37. Service record also proves that she expired on 4.1.1998 which is also in line with death certificate available with HPCL. This is nothing but is violation of LOI terms and condition Nos. 5 (d) and 5 (e) and also first dealership agreement clause 24 (c) (ii) entered between Shanti Devi and HPCL on 7.11.1988.” 37. Smt. Shanti Devi in whose favour letter of intent was issued on 31.5.1988 died on 4.1.1998. After the death of Smt. Shanti Devi a fresh agreement was executed in the name of petitioner No. 3 with petitioner Nos. 1 and 2 as its partners. Reconstitution was permitted by the Corporation itself. Whether on allegations, which were made in Ground B against Smt. Shanti Devi who died on 4.1.1998 can be relevant for taking any action against the petitioners with whom the agreement was entered on 1.1.2000 is a issue which was required to be considered. 38. A dealership can be terminated on the grounds as mentioned in Clause 29-B of the agreement. Clause 29-B reads as follows: “29B. Notwithstanding anything to the contrary herein contained, the Corporation shall also be at liberty at its entire discretion to terminate this Agreement forthwith upon or at any time after the happening of any of the following event, namely : (a) If the Dealer shall commit a delay, breach or default of any of the terms, conditions, 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:” 39. The agreement which was entered with Smt. Shanti Devi is no more in existence. The firm has been re-constituted and fresh agreement has been entered on 1.1.2000 and it does not appeal to any reason that any default committed by the earlier dealer Smt. Shanti Devi who died on 4.1.1998 can be made a ground for taking any action against the petitioner. 40. The next issue as to whether in the facts and circumstances of the present case, respondents have rightly invoked their power under Clause 29-A of agreement in suspending the supplies. Issuance of show-cause notice for termination of an agreement and suspension of supplies are two distinct actions. Suspension of supply can be made as per Clause 29-A of the agreement. The next issue as to whether in the facts and circumstances of the present case, respondents have rightly invoked their power under Clause 29-A of agreement in suspending the supplies. Issuance of show-cause notice for termination of an agreement and suspension of supplies are two distinct actions. Suspension of supply can be made as per Clause 29-A of the agreement. There has to be application of mind for taking action under Clause 29-A. We have already observed that the objections have been raised by the petitioner on 29.6.2013 praying for revoking the suspension, which objections need to be considered by the Chairman. Looking to the peculiar facts and circumstances of the case, we leave the objections to be considered by the Chairman and while deciding the objections dated 29.6.2013, the Chairman shall specially consider as to whether in the facts of the present case, suspension of supply was necessary. 41. Petitioners having already sent the preliminary objection dated 29.6.2013 before the Chairman/Managing Director of the Corporation, we are of the view that ends of justice be served in disposing the writ petition with a direction to the Chairman/Managing Director, respondent No. 2 to consider the preliminary objections dated 29.6.2013 sent by the petitioners, Annexure-12 to the writ petition, and take an appropriate decision in the light of the observations made by the Court as above. 42. The Chairman may take appropriate decision expeditiously, preferably within six weeks from the date a copy of this order is produced before him. 43. The alternative arrangement to serve the HP customers of the petitioners’ agency may continue but no permanent arrangement be made till the matter is under consideration of the Managing Director/Chairman of the Corporation. 44. Order accordingly. 45. No costs. —————