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2014 DIGILAW 468 (ORI)

Anchal Bihari Pattnaik v. Indian Oil Corporation Ltd.

2014-08-06

A.K.RATH

body2014
Judgment Dr. A. K. Rath, J. By this petition under Article 226 of the Constitution, the petitioners have challenged, inter alia, the order dated 7.6.2011 passed by the Appellate Authority, Indian Oil Corporation Ltd., Mumbai, vide Annexure-5. By the said order, the appellate authority confirmed the order dated 27.10.2008 passed by the Senior Divisional Retail Sales Manager, Bhubaneswar, opposite party no.3, vide Annexure-2 whereby and whereunder the dealership agreement dated 12.5.1982 of the petitioner no.1 was terminated. 2. Shorn of unnecessary details, the case of the petitioners is that pursuant to dealership agreement dated 14.5.1982, petitioner no.1 was appointed as dealer by the Indian Oil Corporation Limited (hereinafter referred to as “the IOCL”) for sale of petroleum products at the retail outlet owned by IOCL in the name and style of M/s.Saila Service Station at Raj Bhawan Square, Bhubaneswar. He wanted to establish another retail outlet at Tamando and sent a letter to the IOCL on 2.9.1991. The IOCL asked the Chief Engineer, National Highway Authority to approve the site plan. The National Highway Authority issued license to him on 4.6.1992 to use the national highway to approach the outlet. Thus he maintained two outlets at two different locations. On 8.1.2007 opposite parties restrained him from selling branded products of Indian Oil. He filed a writ application, being WP(C) No.2005 of 2007, before this Court assailing the action of the opposite parties. The same was allowed on 8.3.2007. On 4.6.2008, the Union Government suddenly hiked the price of petrol and diesel. Due to hike of price of petrol and diesel, the people in large numbers flocked at the retail outlets, created disturbances and damaged the outlet. The staffs of the petitioners were also assaulted by some anti-socials. The seals of the meter were damaged by miscreants. The situation became uncontrollable. At 4.30 P.M, the staffs left the place, since they could not control the situation. The Capital Police Station was informed over telephone. Accordingly, a PCR van came and controlled the situation. At the time of inspection, he was not present at the outlet, but on being informed, he immediately sent a written report to the Capital Police Station on 4.6.2008. At 8.30 P.M on the same day, the officials of the opposite parties came, inspected the outlet and prepared a report at 9.50 P.M. They directed closure of the outlet and handed over the report on the spot. At 8.30 P.M on the same day, the officials of the opposite parties came, inspected the outlet and prepared a report at 9.50 P.M. They directed closure of the outlet and handed over the report on the spot. On 5.6.2008, the Manager of the outlet went to the Capital Police Station and lodged an FIR. A case was registered under Sections 354/323/427/34 IPC. On 4.6.2008, the officials of the IOCL after closing the outlet came for inspection on 5.6.2008. They did not inform him at the time of inspection, whereafter he filed writ petition, being WP(C) No.8300 of 2008, challenging the action of the opposite parties in closing the outlet. While the matter stood thus, the IOCL issued a show cause notice on 20.6.2008 directing him to suspend the sales at Tamando Service Station immediately on the ground that tamper (broken) W&M seals of the dispensing unit, intentional/deliberate closure of the outlet on 4.6.2008 and stoppage of sales of petroleum products to the general public and that three cheques issued by him to the IOCL were bounced by the Bank for insufficient funds. He filed his show cause reply on 2.7.2008. Challenging the said notice, he filed WP(C) No.8950 of 2008. By a common order dated 8.9.2008, the writ petitions being WP(C) Nos.8950 and 8300 of 2008 were disposed of. This Court refrained from interfering with the matter, since the matter was under consideration before the IOCL. However, the writ petitions were disposed of with the following directions; “At this stage, since the matter is under consideration before the opposite parties, we refrain ourselves from interfering with the matter. However, we dispose of these writ petitions with the following directions: (i) The final decision shall be taken by the opposite parties as expeditiously as possible preferably within a period of six weeks from the date of production of the certified copy of this order by the petitioner before the Senior Divisional Retail Sales Manager, IOC Ltd., Bhubaneswar, opposite party no.2. It will be open for the petitioner to send its representative before the said officer and before taking a final decision an opportunity of personal hearing may also be given, if necessary. It will be open for the petitioner to send its representative before the said officer and before taking a final decision an opportunity of personal hearing may also be given, if necessary. (ii) An inventory of the material which is found to be within the compound of the retail outlets shall be prepared separately by the officers of the opposite parties during which petitioner may be given opportunity to remain present at the premises at the time of taking inventory. However, an option will be sought from the petitioner as to whether he wants to sell the products to the opposite parties or the opposite parties may sell the products in his presence. On giving option, the Indian Oil Corporation shall take a decision. However, in case no option is received it will be open for the opposite parties to take decision either to purchase the same or to sell in presence of the representative of the petitioner, as the case may be. (iii) In case the final decision goes against the petitioner, no new allotment of the retail outlets in question shall be made for a period of one month to enable the petitioner to file an appeal or approach the appropriate forum, as the case may be. However, it will be open for the Indian Oil Corporation to make its own arrangement for operation of the retail outlets during pendency of the very proceedings by deputing their representative or through an outsider for the time being.” After disposal of the aforesaid writ petitions, by order dated 27.10.2008, vide Annexure-2, the IOCL terminated his dealership. As would be evident from the said notice, vide Annexure-2, during inspection on 4.6.2008 carried out by the officers of the IOCL in the presence of Weights & Measure Department at the retail outlet, Raj Bhawan Square, the following discrepancies were found: (i) tampered (broken) W&M seals of the dispensing unit (Sl.no.MU L&T 2430), (ii) intentional/deliberate closure of the retail outlet on 04.06.2008 and stoppage of sales of petroleum products (MS/HSD/Lubes etc.) to the general public/customers, in spite of having a huge stock of the products with a ill motive to earn more profits taking advantage of the price hike of the products w.e.f. mid-night of 04/05 June 2008. Furthermore, on 06.06.2008, SBI Bhubaneswar Main Branch informed IOCL that three cheques viz. Furthermore, on 06.06.2008, SBI Bhubaneswar Main Branch informed IOCL that three cheques viz. cheque No.52107 dt.4.6.2008 for Rs.5,27,941/-, cheque no.52108 dt.4.6.2008 for Rs.4,08,965/-and cheque no.52111 dt.4.6.2008 for Rs.4,63,000/- issued by petitioner no.1 had been bounced/returned unpaid by the banker for insufficient fund which violates the terms and conditions of clause-56(g) of the Dealership Agreement. Challenging the said notice dated 27.10.2008, he filed WP(C) No.16580 of 2008. The said writ petition was disposed of on 10.12.2008 with a direction to him to prefer an appeal. By order dated 20.5.2009 the appeal was disposed of. The appellate authority disposed of the appeal holding that the termination of the retail outlet on the basis of tampering of W&M seal is invalid & set aside the termination order. But then, no observation was made in respect of remaining irregularities for which dealership agreement had been terminated. Again, he filed writ petition being WP(C) No.9007 of 2009. The said writ petition was disposed of on 28.2.2011 remitting the matter back to the appellate authority to hear both the parties on the remaining irregularities and dispose of the same. After disposal of the writ petition, the petitioner approached the appellate authority on 7.3.2011 by filing the appeal and produced the relevant documents. The appellate authority without considering the matter in a proper perspective dismissed the appeal. 3. Pursuant to issuance of notice, opposite parties 1 to 4 entered appearance and filed a counter affidavit. The case of the opposite parties is that the writ petition involves purely disputed question of facts. Further, the writ petition is not maintainable as the parties are bound by the contract which is in the realm of private law. It is not a statutory contract and such contractual obligations cannot be enforced by the writ court. It is further stated that on 16.4.1982, he was awarded with dealership for sale of petroleum products of IOCL. An agreement was entered between him and the IOCL on 14.5.1982. On 4.6.2008, the Union Government took a decision to enhance the price of all petroleum products which would be effective from the midnight of 4.6.2008. On the very same day, the Deputy Manager (Retail Sales) received the complaints from the general public that his retail outlet was closed and he was not selling the petroleum products despite huge stock available. On 4.6.2008, the Union Government took a decision to enhance the price of all petroleum products which would be effective from the midnight of 4.6.2008. On the very same day, the Deputy Manager (Retail Sales) received the complaints from the general public that his retail outlet was closed and he was not selling the petroleum products despite huge stock available. On receipt of such complaints from general public, the Deputy Manager (Retail Sales) reached at his retail outlet at about 6.00 P.M. He found that the retail outlet was closed and the employees/his representatives left the retail outlet unmanned. It was further found that metering unit of one of the dispensing unit had been tampered with. The matter was reported to the Legal Metrology Department for further verification. The officials of the Legal Metrology Department immediately reached at the outlet. A joint inspection was conducted by the officials of the IOCL and the officials of Legal Metrology Department. During inspection, it was found that the seal of the metering unit of one of the dispensing unit provided by Legal Metrology Department found tampered/broken. Since the retail outlet was closed unauthorisedly without any intimation to the Divisional Office and the seal of the metering unit of one of the dispensing unit had been tampered with, the Deputy Manager (Retail Sales) sealed nozzles of all dispensing unit and advised him not to sale or uplift any product as per the provisions of Marketing Discipline Guidelines, 2005 and Dealership Agreement. Accordingly, a show cause notice was issued to him on 4.6.2008 asking him to explain the deviation/violation of the dealership agreement and the guideline. Since the show cause submitted by him was unsatisfactory, the IOCL terminated the dealership agreement on 27.10.2008. By order dated 10.12.2008, this Court disposed of WP(C) No.16580 of 2008 directing the appellate authority to dispose of the appeal by passing a reasoned order. The appellate authority by order dated 20.5.2009 decided that the termination of his retail outlet on the basis of tampering of W&M seal is invalid and accordingly set aside the termination order for the said irregularity. However, no observation or decision was made in respect of remaining irregularities, such as, bouncing of cheques and closer of retail outlet for which the dealership agreement was terminated. Assailing the order dated 20.5.2009, petitioner no.1 filed another writ petition. However, no observation or decision was made in respect of remaining irregularities, such as, bouncing of cheques and closer of retail outlet for which the dealership agreement was terminated. Assailing the order dated 20.5.2009, petitioner no.1 filed another writ petition. After hearing both the parties, this Court disposed of WP(C) No.9007 of 2009 on 28.2.2011 remitting the matter back to the appellate authority to hear both the parties on the remaining irregularities and dispose of the same as expeditiously as possible. In compliance of the said order, petitioner no.1 filed an appeal before the appellate authority on 7.3.2011. The appellate authority, after hearing both the parties and taking into consideration all the relevant materials, dismissed the appeal on 7.6.2011. 4. Heard Mr.S.P.Mishra, learned Senior Advocate for the petitioner and Mr.Sanjit Mohanty, learned Senior Advocate for the opposite parties. 5. Mr. Mishra, learned Senior Advocate for the petitioners, submitted that the appellate authority has committed a manifest illegality and impropriety in not considering the appeal filed by petitioner no.1 in its proper perspective. The order passed by the appellate authority suffers from glaring infirmities. He submitted that due to sudden hike of price of petrol and diesel, a large number of people flocked at the retail outlets, created disturbances, damaged the outlet and assaulted his staff. The seals of the meter were damaged by the miscreants and the situation became uncontrollable. On 5.6.2008, the Manager of the retail outlet lodged an FIR before the Capital Police Station narrating the facts happened on 4.6.2008. Because of said contingency, he had no option than to close the outlet. The appellate authority brushed aside the said facts. So far as bouncing of cheques is concerned, he submitted that on 11.6.2008, the IOCL issued a notice under Section 138(b) of the Negotiable Instrument Act regarding dishonour of cheques amounting to Rs.9,36,906/-. Thereafter, he paid a sum of Rs.5,60,000/-vide demand draft no.015830 which was accepted by the IOCL and requested the IOCL authorities to adjust the said amount out of the certified stock taken by SDRSM. He further submitted that when the dealership agreement was terminated, the IOCL had taken 13435 liter of extra-premium petrol amounting to Rs.6,55,971/-and 16720 liter of ordinary petrol amounting to Rs.7,67,448/-and extra-premium diesel amounting to Rs.2,73,942/-. The total cost of oil taken by the IOCL authorities was Rs.16,98,361/-. He further submitted that when the dealership agreement was terminated, the IOCL had taken 13435 liter of extra-premium petrol amounting to Rs.6,55,971/-and 16720 liter of ordinary petrol amounting to Rs.7,67,448/-and extra-premium diesel amounting to Rs.2,73,942/-. The total cost of oil taken by the IOCL authorities was Rs.16,98,361/-. Thus nothing was due from him and, as such, the finding of the appellate authority that he violated clause 56(g) is perverse. He further submitted that clause 56(g) of the dealership agreement does not apply in the present case, as no notice was issued by IOCL authorities demanding any money within four days. Pursuant to issuance of notice for bouncing of cheques under Section 138 of the N.I Act, opposite parties had received all payments. 6. The present dispute revolves round the termination of dealership agreement on two counts; (i) closure of retail outlet and (ii) bouncing of cheques. 7. The appellate authority came to hold that the claim of petitioner no.1 that on 4.6.2008 at 2 P.M a number of outlets were closed down, but his retail outlet continued to sell was contrary to the report of State Enforcement Squad. According to the said report, State Enforcement Squad found that the retail outlet of petitioner no.1 remained closed, while other outlets were carrying out sales as usual and in fact one retail outlet of HPCL on call was also opened. The appellate authority further found that in the FIR, it was mentioned that a huge crowd quarreled amongst customers and with retail outlet staff, broke the seals and assaulted the staff. It is further revealed that a PCR van was sent by the police station, but the police report dated 12.6.2008 revealed that mob dispersed after PCR van reached. Nothing is mentioned in the F.I.R. dated 5.6.2008 or in the police report dated 12.6.2008 that there was any disturbance afterwards. Having held so, the appellate authority came to hold that the sales were discontinued with a motive to sale the product to the general public at a higher price next day to earn undue profit. Moreover, by abandoning the retail outlet, petitioner no.1 compromised with the safety of retail outlet. 8. A huge quantity of petroleum products were available for sell on 4.6.2008. Moreover, by abandoning the retail outlet, petitioner no.1 compromised with the safety of retail outlet. 8. A huge quantity of petroleum products were available for sell on 4.6.2008. It is quite natural on the part of the general public that when there is an announcement by Union Government about the hike of price of petrol and diesel, there will be a large crowd at the petrol pump. With a long experience, the petitioner no.1 must have anticipated the same. When the PCR van reached the spot, the mob disappeared, but then the retail outlet was not opened. Obviously, the same was for oblique motive to sell the available stock at a higher price. The appellate authority, relying on the letter dated 5.6.2008 of the Assistant Civil Supplies Officer, State Enforcement Squad (Squad) to Commissioner-cum-Secretary Food, Supplies & Consumer Welfare Department, Government of Orissa, held that squad visited some retail outlets on 4.6.2008 in Bhubaneswar to take stock of the situation due to announcement of enhancement of price of MS/HSD from mid-night of that day. They found that four of the retail outlets were conducting sales as usual and one HPCL RO, which was found closed, opened on call. However, the retail outlet of petitioner no.1 remained closed. Based on the letter dated 5.6.2008 of the Squad, the IOCL and HPCL were advised to take follow up action in the matter. Before closing of the outlet, no intimation whatsoever was given to the opposite parties. On a cumulative assessment of the entire materials on record, this Court is satisfied that sales in the retail outlet of the petitioner no.1 were discontinued with an avowed oblique motive to sell the petroleum products at a higher price to the general public on the next day. The further question arises for consideration is as to whether the same attracts clause 56 (h) of the dealership agreement. The same is quoted hereunder : “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:- (h) If the Dealer does not adhere to the instructions issued from time to time by the Corporation in connection with safe practices to be followed by him in the supply/storage of the Corporation’s products or otherwise.” The case of the petitioners squarely comes under the said clause. 9. The next question that survives for consideration is as to whether petitioner no.1 has paid all amounts after dishonour of cheques issued by him. The petitioner no.1 issued three cheques, i.e. cheque nos.052107, 052108, 052111 all dated 04.06.2008 of Rs.5,27,941/-, Rs.4,08,965 and Rs.4,63,000 respectively. The total amount of cheque was Rs.13,99,906/-drawn on Central Bank of India. The said cheques were bounced due to insufficient funds. A demand notice was issued under Section 138 of the N.I Act on 11.6.2008. In reply to the notice, on 2.7.2008 the petitioner stated that bouncing of cheques cannot be attracted as he had informed the IOCL previously not to encash the same, since the matter was sub judice before this Court in WP(C) No.8300 of 2008. Clause 56(g) of the dealership agreement provides that if the dealer shall for any reason make default in payment to the Corporation in full or his outstandings as appearing in Corporation’s books of account beyond 4 days of demand by the Corporation, the IOCL shall be at liberty to terminate the agreement. Admittedly, three cheques amounting to Rs.13,99,906/-were issued by him on 04.06.2008 drawn on Central Bank of India. All the three cheques were dishonoured for insufficient funds. Demand notice was issued on 11.06.2008 under Section 138(b) of the N.I Act directing petitioner no.1 to reply the same within fifteen days from the date of receipt of demand notice. But then, he paid an amount of Rs.5,60,000/-on 27.10.2008. Admittedly, the entire amount demanded by the IOCL was not paid. A part of the amount was paid on 27.10.2008 which is long after the demand notice. 10. While exercising the power under Article 226 of the Constitution of India, the High Court does not act as a fact finding body and cannot substitute the opinion of the appellate authority, unless the same is perverse. 11. On taking a holistic view of the matter, this Court finds that the order of the appellate authority does not suffer from any illegality or infirmity warranting interference of this Court. The writ petition, sans any merit, is accordingly dismissed.