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2019 DIGILAW 188 (GUJ)

Saurashtra Trading Agency v. Indian Oil Corporation

2019-03-05

A.Y.KOGJE

body2019
JUDGMENT : A.Y. Kogje, J. This petition is filed under Articles 14, 19(1)(g) and 226 of the Constitution of India against issuance of show cause notice by the respondent- Indian Oil Corporation. The petition is filed with the prayers, as under: "(A) Your Lordships may be pleased to issue writ of prohibition and/or writ in the nature of prohibition and/or appropriate writ, order or direction to quash and set aside show cause notice dated 7/26.5.2015 and be further pleased to direct to grant and/or consider to grant post facto approval to the reconstitution of petitioner no.1 firm; (B) Pending admission and final disposal of the present petition, Your Lordships may be pleased to stay the operation and implementation of show cause notice dated 7/26.5.2015;" 2. From the petition, it appears that the show cause notice dated 7.5.2015/26.5.2015 came to be issued upon the petitioners, who are operating in LPG distributorship of the respondent- Corporation. On account of the change in the Constitution of the partnership firm, show cause notice came to be issued by citing clause of the distributorship agreement, which requires signature of partners of the partnership firm. In absence of such signatures on behalf of the partners the sanctity of distributorship agreement could not be maintained. At the stage of issuance of the show cause notice, the present petition is filed. 3. Learned Advocate for the petitioners submitted mainly that the respondent - Corporation was aware of the circumstances on account of which constitution of the partnership firm was changed and after so many years, such drastic action of canceling distributorship by issuing impugned show cause notice is unwarranted. It is further submitted that the impugned show cause notice is issued by an unauthorized person. It is the case of the petitioners that Deputy General Manager is authorized to issue the show cause notice, whereas impugned show cause notice is signed for Deputy General Manager and therefore, the Deputy General Manager is not the show cause notice issuing authority. 4. As against this, learned Advocate for the respondents relying upon the Affidavit in reply stated that as and when issue of change in the constitution came into knowledge of the respondent - Corporation, immediately the show cause notice came to be issued. 4. As against this, learned Advocate for the respondents relying upon the Affidavit in reply stated that as and when issue of change in the constitution came into knowledge of the respondent - Corporation, immediately the show cause notice came to be issued. Pleadings containing the circumstances under which the change in constitution of partnership was made, were not relevant for the purpose of distributorship agreement and or the relation between the respondent-Corporation and petitioner-Partnership firm. Learned Advocate draws attention of this Court to the relevant clause which prohibits distributor from entering into any type of arrangement contract or understanding whereby operation of the distributor is changed directly or indirectly or in part or whole. Learned Advocate for the respondents submitted that the challenge raised is in the realm of law of contract and therefore, the applicant ought not to have invoke the writ jurisdiction, as several factual aspects, require to be considered. 5. Lastly, he submitted that the Corporation, after following due procedure, has arrived at a decision for issuing the show cause notice and that decision was taken by the Deputy General Manager, who is authorized person for issuing the show cause notice. Pursuant to such decision, only communication is made under the signature of a subordinate officer, which does not mean that the impugned show cause notice has been issued by an unauthorized officer. 6. The Court has taken into consideration the contents of the pleadings and documents produced on record and submission made by the Advocate for the Parties. The distributorship agreement is produced in the petition at Annexure-II Clause-23 (c) of which reads as under: "(I) the Distributor shall not enter into any arrangement, Contract or understanding whereby the operations of the Distributor there under are or may be controlled/carried out and/or financed by any other person firm or Company. Whether directly or indirectly and whether in whole or in part;" 7. From the pleadings, it appears that distributorship agreement was signed by the Corporation on one hand and the existing partners of the petitioner firm on the other hand. The signatories were Rashmiben Chetankumar Gadhia and Sujeshkumar Jaswantilal Gadhia. Whether directly or indirectly and whether in whole or in part;" 7. From the pleadings, it appears that distributorship agreement was signed by the Corporation on one hand and the existing partners of the petitioner firm on the other hand. The signatories were Rashmiben Chetankumar Gadhia and Sujeshkumar Jaswantilal Gadhia. From the pleadings, it appears that after the agreement was executed, there was unilateral change in the constitution of petitioner - partnership firm, where Dinesh Hirjibhai Padariya, Mukeshbhai Hirjibhai Padariya, and Umeshbhai Hirjibhai Padariya were introduced as working partners and the documents pertaining to the operation of partnership were also amended including Bank account to include name of the newly added partners. This aspect was never brought to the notice of the respondent- Corporation. Therefore, petitioner was in breach of terms of distributorship agreement. With this coming to the knowledge, the respondent - Corporation, issued show cause notice calling upon the petitioner-firm to respond to the contents of the show cause notice within the period of 10 days. Show cause notice clearly stipulates the discrepancy observed during such inspection which includes the breach of condition of the distributorship agreement. It appears that instead of responding to the show cause notice and to bring to logical conclusion, the petitioner has rushed before this Court on two points namely that the Corporation was aware of the change in the constitution of partnership firm and had permitted such change for long period and therefore, had condoned alleged breach. 8. The oncontrovarted Para-12 to 14 of the Affidavit in reply, read as under: "12. With reference to Para 3, The petitioner agreed that they in past applied for reconstitution duly to the Corporation several times and the Corporation based on merit approved all the cases. So the petitioner is fully aware the procedure to be followed before such reconstitution and any violation of the procedure would be contrary to the agreement between the petitioner and the Corporation. So from the past record of the distributorship it is amply clear that Corporation is always fair to the petitioners and always considered their appeal/requests in a transparent manner in their favour as and when Corporation was intimated and due approval is sought. 13. With reference to Para 4, the contents are not admitted. It is not admitted that the Corporation had any knowledge regarding leave of Shri Suresh J. Gadhia as stated in the petitioner. 13. With reference to Para 4, the contents are not admitted. It is not admitted that the Corporation had any knowledge regarding leave of Shri Suresh J. Gadhia as stated in the petitioner. I state that Shri Suresh J. Gadhia signed the distributorship agreement 25.04.2001 himself and agreed as follows:- Quote "I am very much interested in the operation of the distributorship and shall be responsible for any acts of omission and Commission in the distributorship as well as applicability of the Terms and Conditions of the Indane Distributorship Agreement." 14. With reference to Para 5, the contents are not admitted. Unlike earlier occasion Smt Rashmiben C Gadhia never expressed her difficulty before the competent authority. She also did not put forward any proposal for dropping partner and inducting new partners as per policy for reasons best known to her. Her other partner also did not inform the Corporation his any intention to retire who was equally responsible for operation of the distributorship and was responsible for any acts of omission and Commission in the distributorship as well as applicability of the Terms and Conditions of the Indane Distributorship Agreement. Further as per the unauthorized partnership agreement executed on the year of 2000 i.e. 11.12.2000 by Smt Rashmiben C Gadhia she became a minority stake holder by having only 25% share thereby rendering the Indane Distributorship Agreement null and void and called immediate cancellation of the same which has no longer had any legal sanctity. When the same was detected the Corporation initiated process for termination of the agreement for safeguarding its commercial interest." 9. Next contention regarding unauthorized person has issued show cause notice, in the affidavit, it is stated as under: "15. With reference to Para 6, the contents are not admitted. Approval for issuance of show cause notice was taken from competent authority. As per policy of the Corporation there is no bar in signing letters entrusted with the job of Deputy General Manager during his absence from office on account of tour/leave after obtaining due approval from competent authority. In this case Deputy General Manager [LPG], GSO was on long leave and officer who was authorized to function in the capacity of Deputy General Manager [LPG], GSO signed the letter which is totally in conformity of his authority and jurisdiction. I state that the issuance of show cause notice is duly approved by the Dy. In this case Deputy General Manager [LPG], GSO was on long leave and officer who was authorized to function in the capacity of Deputy General Manager [LPG], GSO signed the letter which is totally in conformity of his authority and jurisdiction. I state that the issuance of show cause notice is duly approved by the Dy. General Manager. The copy of the proposal note is annexed here with marked as Annexure R-1. I further state that the Head of LPG Dept. Gujarat i.e. DGM [LPG] was away on leave and he had expressly advised all concerned by an email that Shri P.B. Patil, Chief Manager (LPG Sales) GSO will look after all the activities on his behalf. Accordingly said officer acting under the authority has signed the show cause notice which was duly approved by the competent authority." 10. The Court has also taken into consideration the decisions by the Deputy General Manager dated 15-04-2015, which was minutized under the sanction note and the Court is satisfied that it was Deputy General Manager (LPG) GSO, who has approved the action of issuance of the show cause notice and merely the signatory to the show cause notice being subordinate, it cannot be held that the impugned show cause notice is issued by unauthorized person. 11. Lastly, considering the fact that the petition is at the stage where the petitioner is facing show cause notice to the alleged breach of terms of contract, this Court is not inclined to examine merits and demerits pertaining to the contents of the show cause notice. Lest it may affect the proceedings pursuant to such show cause notice. 12. In view of the above, petition being pre-mature in nature, deserves to be and is hereby dismissed. Interim relief granted earlier is hereby vacated. Notice is discharged. No order as to costs.