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2014 DIGILAW 517 (GAU)

Dilip Dutta v. State of Assam

2014-05-13

HRISHIKESH ROY

body2014
JUDGMENT Hrishikesh Roy, J. 1. Heard Mr. A.C. Borbora, the learned Counsel appearing for the petitioners. The Indian Oil Corporation Ltd. (hereinafter referred to as the IOC) and their officers are represented by the learned Senior Counsel Mr. M.K. Choudhury. The Liquidator appointed for the Assam Cooperative Marketing and Consumers Federation Ltd. (hereinafter referred to as the STATFED) is represented by advocate Mr. A.M. Buzarbaruah and Ms. J. Bora. The Standing Counsel, Cooperation Deptt. Dr. B. Ahmed, appears for the State respondents. The termination of L.P.G. Distributorship, inter alia, at North Lakhimpur and Nalbari through the impugned order dated 28.9.2010 by the IOC is under challenge in these two cases. Since common issues are raised and the arguments are on the same line, both cases are considered together. The facts in this judgment are taken from the W.P.(C) 5831/2010. 2. The STATFED before it went into liquidation, decided to enter the business of distributorship of L.P.G. Cylinders in various locations in Assam and accordingly a Memorandum of Understanding (MOU) dated 27.10.2005 was reached between the STATFED and their Class B shareholder for appointing the writ petitioner as a managing agent for L.P.G. distributorship business at North Lakhimpur. Similar MOU was also executed on 18.10.2005 with the writ petitioner in the W.P.(C) 5829/2005 for the same business at Nalbari. Thereafter individual distributorship agreements were executed in 19 towns between the IOC and the local entity described as the STATFED location Indent Agency for running the business of distribution of L.P.G. Cylinders in 19 towns and the writ petitioners who are Class-B shareholders of the STATFED were appointed as managing agents to operate the distributorship. 3. However when the STATFED went into liquidation on 14.62006 and the Cylinder supply was discontinued, the aggrieved L.P.G. agents approached the High Court to challenge the IOC's action. But considering the agents to be strangers to the distributorship agreement, the learned Single Judge through the common judgment dated 26.3.2009, dismissed the writ petitions. But in the resultant Writ Appeal No. 140/2009 filed by the agent Dilip Dutta, the Division Bench on 9.2.2010 (Annexure-12) declared that because of the STATFED going into liquidation will not automatically terminate the on-going distributorship business and accordingly the IOC's order dated 28.7.2006 (Annexure-8) stopping delivery of L.P.G. Cylinders to the agents was quashed by the Division Bench on 9.2.2010 (Annexure-12). However if IOC contemplated any further action against the L.P.G. agents, the Division Bench gave liberty but with due and adequate notice. The Court categorically observed that this protective order will apply to the three agents who had approached the Division Bench. 4. But still considering the writ petitioners to be strangers to the L.P.G. business, the show-cause-notice was issued on 4.3.2010 (Annexure-12A) only to the Liquidator of the STATFED, proposing to terminate the L.P.G. distributorship operated by the agents in the 19 towns of Assam. By Invoking Clause 21 of the distributorship agreement, the IOC considered the STATFED to have sublet the L.P.G. business and on this basis, the terminations of the agencies were proposed. The official Liquidator of STATFED in his reply mentioned that the L.P.G. distributorship are being managed by Class-B Members of the STATFED and accordingly the invoking of Clause 21 relating to subletting of distributorship was denied by the Liquidator. However considering the reply to be unsatisfactory, through the impugned order dated 28.9.2010 (Annexure-16), the 19 L.P.G. distributorship was terminated by the IOC and accordingly the aggrieved L.P.G. agents have filed these cases. 5. The petitioners contend that the IOC could not have terminated the L.P.G. distributorship without affording a fair and adequate opportunity to the L.P.G. agents and accordingly the termination decision is contended to be in breach of the principle of audi alteram partem. 5.1 Referring to the judgment dated 9.2.2010 (Annexure-12) in the W.A. 140/2009, the Senior Counsel Mr. A.C. Borbora argues that the legal status of the L.P.G. agents was clearly recognized by the Division Bench and accordingly the IOC erred in treating them as strangers to the L.P.G. distributorship business and on this basis the denial of fair opportunity to his clients is contended to be legally unjustified. 5.2 Projecting that the impugned termination directly affects the writ petitioners who are managing the L.P.G. distributorship agencies, the Counsel submits that there is tacit recognition of the L.P.G. agents by the IOC since it is the agents and not the STATFED who were operating in the field and presence of the agents in the concerned town was recognized and acknowledged by the IOC in the numerous inspection notes and other correspondence with the L.P.G. agents. 6. Supporting the writ petitioners Mr. 6. Supporting the writ petitioners Mr. A.M. Buzarbaruah, the learned Counsel appearing for the Liquidator of STATFED submits that invocation of Clause 21 of the distributorship agreement by the IOC was unjustified here in as much as there is no subletting of the agency to anyone, in pursuant to the agreement(s) dated 27.10.2005 (North Lakhimpur) and 18.10.2005 (Nalbari, Jagara). Therefore since Clause 21 operates prospectively, the previous MOU by the STATFED with the writ petitioners can't be the basis for termination of the distributorship agreement. 6.1 That apart, since the IOC had entered into the distributorship agreement not with the STATFED but with the STATFED North Lakhimpur Indent Agency and the STATFED Nalbari Jagara Indent Agency, the IOCL were definitely aware of the arrangement under which the L.P.G. distributorship was granted in these two towns and accordingly the reluctance of the Corporation to afford a hearing to the L.P.G. agents is being questioned by Mr. A.M. Buzarbaruah. 7. For the IOC Mr. M.K. Choudhury, the learned Senior Counsel submits that the L.P.G. agents were never formally recognized by the IOC and therefore in the eye of the company, the writ petitioners are strangers to the L.P.G. distributorship business. Accordingly the Counsel justifies restricting the hearing opportunity to the only Liquidator of STATFED by contending that the opportunity to the Principal should be construed as due and adequate opportunity to the L.P.G. agents operating under the umbrella of the STATFED. 7.1 Referring to the STATFED's letter dated 17.6.2005, Mr. Choudhury submits that the L.P.G. distributorship are being operated by the branch officers of the STATFED and therefore the non-recognition of the L.P.G. agents is contended to be justified for the impugned termination order. 8. In the earlier round, i.e. W.P.(C) 3985/2006 and W.P.(C) 3986/2006, the learned Single Judge considered the L.P.G. agents to be strangers and accordingly questioning their locus standee to challenge the L.P.G. discontinuation order of the IOC, the writ petitions were dismissed on 26.3.2009 (Annexure-11). But the decision was reversed by the Division Bench through its judgment dated 9.2.2010 (Annexure-12) in the W.A. No. 140/2009 by recognizing the requirement of giving of due and adequate notice to the STATFED and the L.P.G. agents. In fact the Division Bench specifically observed that their order will apply to the agencies operated by the writ appellants. 9. But the decision was reversed by the Division Bench through its judgment dated 9.2.2010 (Annexure-12) in the W.A. No. 140/2009 by recognizing the requirement of giving of due and adequate notice to the STATFED and the L.P.G. agents. In fact the Division Bench specifically observed that their order will apply to the agencies operated by the writ appellants. 9. The IOC in terminating the L.P.G. distributorship proceeded on the basis that notice to the Liquidator STATFED is sufficient as the L.P.G. agents are operating under STATFED. But the STATFED is under liquidation and a relationship of principal and agents can't be read automatically between STATFED and the L.P.G. distributorship. Therefore the notice given by the IOC to the STATFED can't be construed as notice to the principal. 10. It must also be borne in mind that the STATFED went into liquidation on 14.6.2004 and a Liquidator is now in charge of the organization. Obviously the funding L.P.G. distributorship, their management etc. were all by L.P.G. agents and the STATFED had little role in the L.P.G. business. In this backdrop, not affording a hearing to the affected party can't be condoned and the impugned termination therefore cant' be said to be through due process. 11. Upon careful consideration of the 9.2.2010 (Annexure-12) judgment in the WA No. 140/2009, the IOC in my view couldn't have ignored the writ petitioners by considering them to strangers to the L.P.G. distributorship business. The termination of L.P.G. distributorship directly affects the writ petitioners and therefore it can't be said that opportunity need not be given to them and the show-cause-notice issued to the Liquidator of STATFED can be considered as due and adequate notice for the L.P.G. agents as well. 12. Moreover since IOC invoked Clause 21 of the distributorship agreement and legality of recourse to this power is questioned in this proceeding, under normal circumstances, it would have been necessary for the Court to decide the issue. But since termination was ordered without affording any opportunity to the writ petitioners and having decided that the L.P.G. agents can't be treated as strangers, the IOC is now expected to afford a hearing to the writ petitioners. But since termination was ordered without affording any opportunity to the writ petitioners and having decided that the L.P.G. agents can't be treated as strangers, the IOC is now expected to afford a hearing to the writ petitioners. Therefore I leave it to the parties to raise the issue during the ordered process and expect the competent authority of the IOC to give a decision on whether invocation of Clause 21 is warranted in the facts of these cases. 13. Therefore since termination of the L.P.G. distributorship was ordered without affording hearing to the affected L.P.G. agents, the impugned order dated 28.9.2010 (Annexure-16) is declared to be vitiated and the same is quashed. Consequently if the IOC wishes to proceed further, they may do so only after affording due and adequate opportunity to the writ petitioners. The IOC is also at liberty to take a view in favour of the petitioners but if they wish to proceed against them, they may do so only through due process. However this order is confined to the L.P.G. agents of Nalbari and North Lakhimpur and not to the other L.P.G. agents who are sleeping over the matter and are not before the Court. Both writ petitions are accordingly are allowed with the above direction without any order on cost. Petition allowed