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2025 DIGILAW 278 (KER)

S. Baby Girija v. Indian Oil Corporation Limited

2025-02-17

NITIN JAMDAR, S.MANU

body2025
JUDGMENT : S.MANU, J. The Petitioner in W.P.(C)No.36046/2024 has filed this appeal aggrieved by the dismissal of the writ petition by the judgment dated 12 November 2024, passed by the learned Single Judge. Appellant approached this Court seeking to quash Exts.P2 and P3 and allied reliefs. 2. Appellant had entered into a dealership agreement with Indian Oil Corporation Ltd. on 21 June 2002. She was engaged as a dealer of a Petroleum retail outlet at Jagathy, Thiruvananthapuram District. The Corporation received a complaint from one Harisankar in October 2020 regarding the management and operation of the retail outlet. A show-cause notice was issued to the Appellant on 21 January 2022. The notice was issued after a committee nominated by the competent authority of the 1st Respondent company made enquiries regarding the allegations. The Appellant submitted a reply dated 5 February 2022. After examining the reply of the Appellant, the 2nd Respondent issued a show-cause notice for termination to the Appellant on 29 September 2022. In the show-cause notice, various factual aspects which prompted the company to proceed with termination of the dealership and the response offered by the Appellant were narrated in detail. Relevant clauses of the agreement were referred to. The company arrived at a conclusion that the breach of the terms of the agreement was obvious and therefore called upon the Appellant to show-cause as to why the dealership shall not be terminated. Strangely, along with the writ petition the show-cause notice dated 21 January 2022 and the reply submitted by the Appellant were not produced. Those documents are in fact very relevant as far as the issue involved in the case is concerned. To the show-cause notice issued on 29 September 2022, the Appellant replied on 12 October 2022 by Ext.P4 reply. Personal hearing was given to the Appellant on 21 March 2023. Thereafter by Ext.P2 notice dated 11 October 2024, the Corporation terminated the agency. The petitioner filed the writ petition shortly after receiving Ext.P2. 3. The Respondent Corporation filed counter affidavit refuting the contentions of the Appellant. In response to the counter affidavit, the Appellant filed a reply affidavit. Writ petition was thereafter heard by the learned Single Judge. As noted at the outset, the same was dismissed by judgment dated 12 November 2024. 4. The retail outlet was allotted to the Appellant in 2002 under the social objective category (Scheduled Caste (SC) Category). In response to the counter affidavit, the Appellant filed a reply affidavit. Writ petition was thereafter heard by the learned Single Judge. As noted at the outset, the same was dismissed by judgment dated 12 November 2024. 4. The retail outlet was allotted to the Appellant in 2002 under the social objective category (Scheduled Caste (SC) Category). The crux of the complaint against the Appellant was that the unit was mismanaged and was under benami operation. According to the company, its Vigilance Department duly investigated the complaint and finding the allegation to be correct, steps were taken in accordance with the established procedure. From the notice of termination under challenge it can be gathered that 7 items of specific violations were noticed by the company regarding which explanation was sought from the Appellant. Specific violations pointed out in Ext.P2 are as under: - “I.The Bank Statement from 01.04.2020 to 31.10.2020 of one Smt. Sandhya reveals that the daily sales proceedings are deposited in Smt.Sandhya's Current Account (A/c No.14160200004337) and then transferred to M/s.Vigneswara Fuels Current Account (A/C No:14160200003065) and then to your SAP account for taking load. On verifying the RO statement, the transactions are matching. II. Sri.Harisankar, who alleges himself that his wife Smt. Sandhya has been managing and operating your retail outlet M/s.Vigneswara Fuels has submitted copies of unfilled, signed blank cheques of you from SBT, Sasthamangalam Branch. III. Documents like correspondence to Trivandrum Corporation, correspondence to FIR No.633/2014 shows that Smt.Sandhya is involved in the RO operation. IV. On investigation, it was found that you have submitted a notarized consent dated 06.06.2015 to transfer the dealership to Sri.Harisankar (the complainant) or Smt. Sandhya (wife of the complainant) in the event of demise of Sri. K. S. Krishnan Nair. It is pertinent to mention that such a consent was not in conformity with the mandatory terms & conditions of the dealership agreement and was not with previous written consent from the Corporation. V. You had entered an Irrevocable Power of Attorney dated 10.04.2002 with one Sri.K.S.Krishnan Nair, father of the complainant, which states that Late K. S. Krishnan Nair can enter into any agreement or contracts with government or governmental agencies and to operate any dealership or franchises awarded by Government or Governmental agencies and to sign any documents, operate and revoke the same on your behalf. From the records available with us, it is found that there is no intimation to Corporation from your end w.r.t this POA. VI. In the written submission filed by you in IA No.1/2020 of OS No.641/2020 before the Hon'ble 3rd Additional Munsiff Court, Trivandrum, you have stated in Para 2 that Sri. K. S. Krishnan Nair was appointed as Power of Attorney holder for management of the day-to-day affairs of the pump in 2002. In the same paragraph, you have stated that the second defendant, Smt. Sandhya (daughter-in-law of Sri. K.S. Krishnan Nair and the second defendant in the said case) was appointed as the manager of the pump by the POA holder for assisting him in the functioning of the pump. VII. You have signed payment vouchers of having received payment by yourself and by one Sri. Vijesh, C/o Baby Girija on 06.02.2019, 06.05.2019, 04.07.2019 and 05.09.2019 which are being alleged by the complainant that they were the share of monthly profit.” 5. Appellant, in her reply dated 12 October 2022, attempted to explain the allegations leveled against her. She denied the allegation that the unit was under benami operation. Regarding the major allegation that a power of attorney was executed in favour of Mr.Krishnan Nair, she stated that the said document was a fabricated document, and she came to know about it only during 2020 after the demise of Mr.Krishnan Nair in 2020. She stated that she had borrowed money from Mr.Krishnan Nair and also from his son Harisankar who complained to the Corporation regarding mismanagement of the outlet. Mr.Krishnan Nair had collected blank papers and blank cheque leaves from the Appellant while lending money. The power of attorney might have been prepared using the blank signed papers. With regard to the allegation of involvement of the daughter of Mr.Krishnan Nair, Mrs.Sandhya, Appellant stated that she was appointed as a sales supervisor when the Appellant was unwell. She disowned her pleading in O.S.No.641/2020 to the effect that Mr.Krishnan Nair was appointed as the power of attorney for the management of the day-to-day affairs of the retail outlet in 2002. She further denied having issued any notarized consent in favour of Mr.Krishnan Nair. She also denied that she had been sharing profits by issuing payment vouchers to Mr.Vijesh. 6. She further denied having issued any notarized consent in favour of Mr.Krishnan Nair. She also denied that she had been sharing profits by issuing payment vouchers to Mr.Vijesh. 6. We heard Mr.Adarsh Kumar, the learned counsel appearing for the Appellant and Mr.E.K.Nandakumar, the learned Senior Counsel appearing for the Respondents. 7. In the Appeal Memorandum and also in the Writ Petition several factual contentions have been raised by the Appellant. The learned Single Judge has not addressed the factual contentions elaborately in the impugned judgment. In proceedings under Article 226, the Court is not acting as an appellate authority, and therefore, appraisal of the factual aspects is not normally within the scope of the proceedings. Yet on an analysis of the pleadings of the case as also the show-cause notice for termination issued by the Corporation and the reply furnished to it by the Appellant, we notice that many of the crucial aspects pointed out by the Respondent Corporation in its notice were not even attempted to be explained by the Appellant. Similarly, clarifications offered for many of the aspects by the Appellant are highly suspicious if analysed based on broad probabilities. The Sequence of events, as narrated by the Appellant in her pleadings in fact shows the desperate attempts made by the appellant to wriggle out, when the Respondent Corporation proceeded on the basis of the complaint. No prudent mind can accept the story, put up in defense by the Appellant. We have adverted to the various clauses of the agreement between the parties. We find that the Corporation has rightly pointed out violation of many of the specific conditions of the agreement. Therefore, we are satisfied that sufficient reasons were there for proceeding against the Appellant from the point of view of the Respondent Corporation. We do not deem it necessary to delve deep into the factual contentions any further, keeping in mind the constricted scope of such an analysis in this intra-court appeal arising from the proceedings under Article 226 of the Constitution. 8. The learned Single Judge entertained the writ petition despite the specific objection regarding maintainability raised by the Respondent Corporation for the reason that the basic contention of the Appellant was regarding violation of the principles of natural justice. In fact, the agreement between the parties contains a specific arbitration clause. Clause 67 of Ext.P1 agreement provides for arbitration. 8. The learned Single Judge entertained the writ petition despite the specific objection regarding maintainability raised by the Respondent Corporation for the reason that the basic contention of the Appellant was regarding violation of the principles of natural justice. In fact, the agreement between the parties contains a specific arbitration clause. Clause 67 of Ext.P1 agreement provides for arbitration. However, as per the said clause the Arbitrator shall be the Director (Marketing) or some other officer of the Corporation who may be nominated by the Director (Marketing). In view of the prevalent legal position regarding appointments of Arbitrators such a clause may not stand valid in the eye of law. At any rate, as the learned Single Judge proceeded to examine the contention regarding the violation of the requirements of natural justice, we proceed to examine the matter further. 9. Mr.Adarsh Kumar contended that the decision to terminate the agency was vitiated by grave violations of the principles of natural justice and fair procedure. He argued that the Appellant was heard by Mr.Sanjib Kumar Behera, the then Chief General Manager of the 1st Respondent on 21 March 2023 at the State Office of the 1st Respondent. However, Ext.P2 notice intimating termination was issued by Mrs. Geetika Verma, Chief General Manager and State Head on 11 October 2024. The learned counsel submitted that the decision was taken after a long delay of several months. Delay defeated the purpose of hearing. The officer who heard the Appellant did not take the decision. Another officer took the decision and communicated it to the Appellant. He contended that the requirements of the principles of natural justice were flouted by the 1st Respondent Corporation. The counsel therefore submitted that the decision to terminate the agency of the Appellant is liable to be set aside and the agency may be restored to the Appellant. 10. The learned Senior Counsel for the 1st Respondent submitted that no violation of the principles of natural justice was involved. According to the learned Senior Counsel, the Corporation had followed fair procedure and effective opportunity of hearing was provided to the Appellant before the impugned decision was taken. The learned Senior Counsel contended that the decision making process regarding termination of an agency involves various offices and authorities of the 1st Respondent. According to the learned Senior Counsel, the Corporation had followed fair procedure and effective opportunity of hearing was provided to the Appellant before the impugned decision was taken. The learned Senior Counsel contended that the decision making process regarding termination of an agency involves various offices and authorities of the 1st Respondent. Though the hearing was offered by the Chief General Manager the said officer is not the authority competent to take a final call in the matter. The Chief General Manager and State Head has to place the matter before the Director (Marketing), Head Office, Mumbai with his proposal for the final decision. When the decision is taken by the Director (Marketing) the same will be communicated by the Chief General Manager and State Head. He therefore submitted that the decision to terminate an agency is an institutional decision and not one taken by an individual officer. The hearing offered therefore comes under the category of institutional hearing recognized under Administrative Law. Therefore, he submitted that there is no merit in the argument advanced by Mr.Adarsh Kumar that there is violation of the rule regarding fair hearing. He also added that the time consumed in taking the final decision and communicating the same to the dealer was on account of the various procedures involved in the process. In view of the submissions advanced by both sides, we find that the only aspect that merits our attention in the appeal is whether there was any violation of the principles of natural justice; to be precise, if the opportunity of hearing provided to the Appellant by the 1st Respondent Corporation satisfied the requirements of fair hearing or not. 11. Appellant admits that an opportunity for hearing was provided on 21 March 2023. According to the Appellant, a request was made for the opportunity to produce some documents during the hearing. The appellant herself stated in the Appeal Memorandum that the documents were partially submitted on 31 March 2023 and fully by 24 April 2023. She has no case that opportunity was not provided to submit documents. Her contention is that if opportunity was provided to refer to and rely upon the documents, it would have helped her to advance her contentions. On this reasoning it is contended that serious prejudice was caused. She has no case that opportunity was not provided to submit documents. Her contention is that if opportunity was provided to refer to and rely upon the documents, it would have helped her to advance her contentions. On this reasoning it is contended that serious prejudice was caused. There is no case for the Appellant that the hearing conducted was not effective or that materials in support of the case were not permitted to be produced. A hearing by an Administrative Authority is not comparable to a proceeding in a court of law. Standards like in a trial by a judicial authority cannot be insisted on in the case of a pre-decisional hearing by an Administrative Authority. Nothing prevented the Appellant from producing the documents at the time of hearing and referring to them also. She was also not prevented from raising contentions with respect to the documents produced later at the time of hearing as, in the nature of those documents, their implications would have been known to the Appellant even at the time of hearing. The appellant has no case that the documents submitted later were not accepted or referred to by the Authorities concerned. We, therefore, find no prejudice caused to the Appellant in this regard. In State of Uttar Pradesh v. Sudhir Kumar Singh and others, [ (2021) 19 SCC 706 ] the Hon'ble Supreme Court, after referring to various previous judgments held as follows: “42. An analysis of the aforesaid judgments thus reveals: 42.1. Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused. 42.2. Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest. 42.3. No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest. 42.3. No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice. 42.4. In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person. 42.5. The “prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice.” 12. Respondent Corporation has explained the decision-making process followed by it in the case of terminating agencies. Appellant has not disputed the submission of the Corporation in this regard. Without doubt, the decision in the matter of terminating an agency is an institutional decision as per the procedure followed by the Respondent Corporation. It is not a decision taken by an individual officer or a designated authority. Several officers are involved in the process. Appraisal at various levels is also involved. In such a situation, the officer conducting the hearing need not be the authority to take the final call. ‘Institutional hearing’ is a well-recognised exclusion to the general rule - ‘one who heard should decide’ We refer to the following observations of the Hon'ble Supreme Court in Kalinga Mining Corporation v. Union of India and others, [ (2013) 5 SCC 252 ] :- “70. ‘Institutional hearing’ is a well-recognised exclusion to the general rule - ‘one who heard should decide’ We refer to the following observations of the Hon'ble Supreme Court in Kalinga Mining Corporation v. Union of India and others, [ (2013) 5 SCC 252 ] :- “70. We also do not find much substance in the submission made by Mr.Krishnan that the Order dated 27-9-2001 is vitiated as it has been passed by an officer who did not give a hearing to the parties. This is clearly a case of an institutional hearing. The direction has been issued by the High Court for a hearing to be given by the Central Government. There was no direction that any particular officer or an authority was to give a hearing. In such circumstances, the orders are generally passed in the relevant files and may often be communicated by an officer other than the officer who gave the hearing. 71. The legality of institutional hearing has been accepted in England since Local Govt. Board v. Arlidge [1915 AC 120 : (1914-15) All ER Rep 1 (HL)]. The aforesaid judgment was quoted with approval by this Court in Pradyat Kumar Bose [ AIR 1956 SC 285 : (1955) 2 SCR 1331 ]. This Court approved the following passage from the speech of the Lord Chancellor in the aforesaid case: (Arlidge case [1915 AC 120 : (1914-15) All ER Rep 1 (HL)] , AC p. 133) “My Lords, I concur in this view of the position of an administrative body to which the decision of a question in dispute between parties has been entrusted. The result of its inquiry must, as I have said, be taken, in the absence of directions in the statute to the contrary, to be intended to be reached by its ordinary procedure. In the case of the Local Government Board it is not doubtful what this procedure is. The Minister at the head of the Board is directly responsible to Parliament like other Ministers. He is responsible not only for what he himself does but for all that is done in his department. The volume of work entrusted to him is very great and he cannot do the great bulk of it himself. He is expected to obtain his materials vicariously through his officials, and he has discharged his duty if he sees that they obtain these materials for him properly. The volume of work entrusted to him is very great and he cannot do the great bulk of it himself. He is expected to obtain his materials vicariously through his officials, and he has discharged his duty if he sees that they obtain these materials for him properly. To try to extend his duty beyond this and to insist that he and other members of the Board should do everything personally would be to impair his efficiency. Unlike a Judge in a court he is not only at liberty but is compelled to rely on the assistance of his staff.” In view of the aforesaid settled position of law, it is difficult to accept the submissions of Mr.Krishnan that the Order dated 27-9-2001 suffers from any legal or procedural infirmity.” Institutional hearings are followed by many institutions in India for several decades and Hon’ble Supreme Court has approved it in plethora of judgments. In the Indian context of Administrative Law also, the practice of institutional hearing is thus accustomed and accepted. Unless any serious prejudice caused in the process is established, hearing offered by an institution as part of its decision-making procedure cannot be held as vitiated solely for the reason that the final decision was not taken by the authority who heard the party directly. Applying the principles of natural justice instinctively without analysing whether any prejudice was actually caused may lead to flawed fallouts. In the instant case the Appellant has not established any such precise case of genuine prejudice on account of the procedure adopted by the Respondent Corporation. 13. We also find no merit in the contention raised by Mr.Adarsh Kumar regarding the delay in taking the decision by the Respondent Corporation. Appellant has no case that any change of circumstances had happened between the date of hearing and the date on which the impugned decision was taken. He has not pointed out any aspect to have been forgotten or omitted to be addressed by the competent authority of the Corporation on account of the delay. Therefore, no prejudice has been caused to the Appellant on account of the time taken by the Corporation in taking a decision in the matter. He has not pointed out any aspect to have been forgotten or omitted to be addressed by the competent authority of the Corporation on account of the delay. Therefore, no prejudice has been caused to the Appellant on account of the time taken by the Corporation in taking a decision in the matter. It is apposite in this connection to refer to the following observations of the Hon'ble Supreme Court in Ossein and Gelatine Manufacturers' Association of India v. Modi Alkalies and Chemicals Limited and another, [ (1989) 4 SCC 264 ] :- “5. On the issue of natural justice, we are satisfied that no prejudice has been caused to the appellant by any of the circumstances pointed out by the appellant. It is true that the order has been passed by an officer different from the one who heard the parties. However, the proceedings were not in the nature of formal judicial hearings. They were in the nature of meetings and full minutes were recorded of all the points discussed at each meeting. It has not been brought to our notice that any salient point urged by the petitioners has been missed. On the contrary, the order itself summarises and deals with all the important objections of the petitioners. This circumstance has not, therefore, caused any prejudice to the petitioners. The delay in the passing of the order also does not, in the above circumstances, vitiate the order in the absence of any suggestion that there has been a change of circumstances in the interregnum brought to the notice of the authorities or that the authority passing the order has forgotten to deal with any particular aspect by reason of such delay. …............” Unless an explicit case of any flaw being caused on account of delay is made out, delay as such cannot be accepted as a reason to find fault with the decision taken. 14. It must be noted that the fuel outlet was allotted to the Appellant under a scheme intended for the benefit of marginalized sections of society. If it virtually inured to the benefit of those not belonging to the targeted sections, the Corporation which rolled out the scheme had a duty rather than authority to terminate the agency and to reallot it to a genuine member of the targeted section of the society. If it virtually inured to the benefit of those not belonging to the targeted sections, the Corporation which rolled out the scheme had a duty rather than authority to terminate the agency and to reallot it to a genuine member of the targeted section of the society. Grabbing of benefits intended for marginalized sections of society by others through manipulations cannot be countenanced. Authorities extending such benefits should be watchful to ensure that the same would actually yield to the benefit of the targeted sections and none else. 15. Upshot of the above discussion is that the appeal is devoid of any merits. We therefore uphold the judgment of the learned Single Judge and dismiss the writ appeal.