IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE FOURTH DAY OF FEBRUARY TWO THOUSAND AND NINE PRESENT THE HON'BLE MS JUSTICE G.ROHINI WRIT PETITION NO : 21796 of 2008 Between: Smt. R.Chandramani W/o R.V. Rammohan Rao Agencies, R/o H.No.62B, S.P. Road, Secunderabad. ..... PETITIONER AND 1 The Chief Regional Manager, LPG and Duly Constituted Attorney Hindustan Petroleum Corporation Limited, Cherlapally, Hyderabad. 2 V.R. Saxena S/o Not known, Manager, Hyderabad LPG HPCL, Cherlapally, Hyderabad. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ of certiorari or any other appropriate writ calling for records relating to proceedings Ref. HLRO/KS, dt. 26-09-2008 issued by the respondent No.1 and quash the same, holding the same as illegal, arbitrary and unconstitution and pass Counsel for the Petitioner:MR.A.RAJASEKHAR REDDY Counsel for the Respondent : MR.M.RAVINDRANATH REDDY FOR R23.10.08,VAK-2 The Court made the following : THE HON’BLE MS JUSTICE G.ROHINI W.P.No.21796 of 2008 ORDER The petitioner herein was appointed as a dealer of the Hindustan Petroleum Corporation Limited (HPCL) for sale of the Corporation’s Liquefied Petroleum Gas (LPG) in cylinders for house-hold consumers and commercial consumers in the distribution areas of Tarnaka, ECIL- Industrial Area (Hyderabad), Shanthi Nagar and Vidyanagar. A Memorandum of Agreement was executed to that effect and the same was renewed from time to time, the latest being dated 18.7.2008 for a further period of five years i.e., from 29.01.2007 to 28.01.2012. Accordingly the petitioner was running the business in the name and style of M/s.Satya Tulasi Agencies. While so, vide proceedings of the 1st respondent – Chief Regional Manager, LPG, HPCL, dated.26.09.2008 the dealership agreement in favour of the petitioner was terminated forthwith and the petitioner was directed to handover the statement/property/records of the Corporation. The said termination is challenged in this writ petition primarily on the ground that the entire procedure adopted by the Corporation in terminating the dealership was in violation of the principles of natural justice. It is alleged that copies of the reports of investigation/enquiry said to have been made by the officials of the Corporation were not furnished to the petitioner. It is also alleged that the grounds upon which the termination was effected were irrelevant and non-existent grounds, and the 1st respondent-Corporation passed the impugned order without properly considering the petitioner’s explanation and without recording any reasons. It is also the contention of the petitioner that even assuming that the alleged irregularities were established, the same being the first offence during the last 27 years of her dealership the cancellation/termination of the Dealership Agreement was unwarranted as per the Marketing Discipline Guidelines issued under Liquefied Petroleum Gas (Regulation of Supply and Distribution) Order 2000. While attributing mala fides to the Senior Regional Manager of Cherlapalli Regional Office, Hyderabad, the petitioner impleaded him as 2nd respondent to the writ petition. It is alleged in the writ petition that the 2nd respondent after taking over the charge as Regional Manager in the year 2004 was continuously harassing the petitioner on one or other pretext and accordingly issued the show cause notice dated.08-09-2005 making all false and baseless allegations. Though he was transferred subsequently, he had influenced the 1st respondent and accordingly got the impugned order of termination passed without conducting any independent enquiry and without giving an opportunity of hearing to the petitioner. I have heard the learned counsel for the petitioner as well as the learned counsel appearing for the respondents and perused the material on record. In the show cause notice dated.27-01-2007 issued by the Corporation it was alleged as under : One Shoukath Humera made a complaint dated.04-12-2006 enclosing a copy of the a subscription voucher bearing No.4553618 dated.14-07-1997 with consumer No.520291 and dealer code 952360 stating that though she paid Rs.3,700/- to the petitioner towards cost of new connection in the last week of November-2006, in the subscription voucher the date was mentioned as 14-07-1997 and the name and address of the dealer affixed in the subscription voucher were not legible. On the basis of the said complaint the records of the petitioner’s dealership were verified by the Executive Sales Officers of the Corporation and it was found that the subscription voucher issued to the consumer Shoukath Humera was back dated as 14-07-1997 even though the first refill cylinder was issued to her during November-2006. On verification of the weekly reports submitted in the past it was also found that the subscription voucher did not reflect the transaction in question. It was also found that the petitioner collected excess charges to the extent of Rs.3,700/- per connection for releasing the new connection against the normal rate of Rs.1,622-88paise. Thereafter the Executive Sales Officers visited the dealership points of the petitioner at Shanthi Nagar and Tarnaka on 14-12-2006 and 12-01-2007 respectively and found several irregularities which made it clear that the petitioner had resorted to release of 120 unauthorized connections at Shanthi Nagar and 85 unauthorized connections at Tarnaka and tried to systematically regularize the same by issuing CTAs and manipulating the systems. It was also alleged that the petitioner was inducting spurious equipment (cylinders/regulators). The irregularities so alleged were summed up in the show-cause notice as under : “(1) Unauthorized release of new connections numbering 205 (120 at Shantinagar & 85 at Tarnaka) with a backdated unauthorized Subscription Vouchers. (2) The transactions for connection numbering 205 (120 at Shantinagar & 85 at Tarnaka) are not reported in weekly reports submitted in the past covering the date mentioned in the above backdated Subscription Vouchers resulting in manipulation of records and release of unauthorized connections and misappropriating the Corporation funds. (3) The indication of spurious equipment viz., 225 cylinders (205 at dealership & 20 at Plant) and 190 regulators. (4) The above 205 unauthorized connections (120 at Shantinagar and 85 at Tarnaka) had been supplied with unauthorized refills by diverting the supplies meant for genuine customers. (5) During the customer contracts made for 13 customer premises, it was revealed that 9 customers had been overcharged by Rs.2077 per new connection (by charging Rs.3700 per New connection for one 14.2 kg full cylinder, regulator, Suraksha hose against the normal price of Rs.1622.88, without stove).” Accordingly, the petitioner was called upon to show cause within seven(7) days as to why action as deemed fit, including termination of dealership agreement, should not be taken as provided under Clauses 10, 11, 12, 24 (a), 28 B(i) and 28 B(k) of the Dealership Agreement. In response to the said show cause notice the petitioner submitted her explanation dated.05-02-2007 denying the allegations and further stating that she cannot offer her conclusive comments in the absence of copies of the complaint of the consumer and other annexed documents. It was also pointed out that the investigation said to have been conducted by the Corporation behind her back was in violation of the principles of natural justice. It is alleged by the petitioner that the 1st respondent neither furnished the documents nor conducted any further enquiry but passed the impugned proceedings dated.26-09-2008 terminating the dealership agreement observing that the petitioner’s explanation was not satisfactory. Hence, this writ petition contending that the impugned order is in violation of the principles of natural justice. The 1st respondent-Corporation filed a detailed counter-affidavit denying the allegations made by the petitioner and stating that along with the show cause notice dated.27-01-2007 the details of the entire investigation were furnished to the petitioner together with list of 205 consumers to whom the unauthorized connections were issued. It was explained that the list of unauthorized connections was taken out from the computer of the writ petitioner herself. Subsequently since the petitioner sought the copy of the complaint made by the consumer, the same was supplied along with the documents annexed to the complaint vide Corporation’s notice dated.05-03-2007 and the petitioner was called upon to submit the further explanation if any. In response to the same the petitioner by letter dated.10-03-2007 sought three (3) weeks time for submitting her reply. She also stated that she did not receive the documents on the basis of which the charges were levelled on her. The Corporation gave a reply dated.13-03-2007 stating that the documents requested by the petitioner farm part of the record available with her and if she still needs to look into the documents available with the Corporation she may visit the Corporation office with 24 hours prior intimation. However, the petitioner did not avail the said opportunity, but by letter dated.22-03-2007 requested further time on the ground that there was a change of her Accountant and the relevant documents were very old. Having considered the petitioner’s request the Corporation waited for a long time and since there was a further response from the petitioner the impugned order of termination was ultimately passed on 26-09-2008 after considering the petitioner’s explanation as well as the relevant records. On the same day as per the terms and conditions of the agreement the physical position of the dealership including the stocks were taken over and were handed over to M/s. Laxmi Vaishnavi Enterprises and M/s. Swamy Enterprises who were operating the dealership on ad hoc basis. All other allegations including that the complaint of Shoukath Humera was concocted have been denied and it is stated that since the petitioner had committed major irregularities such as acceptance of fake Transfer Vouchers and induction of spurious equipment and unauthorized release of connections the dealership was rightly terminated. It is also contended that the writ petition itself is not maintainable since the dealership agreement contains a specific clause for arbitration for all kinds of disputes arising out of or in connection with the contract of dealership. Moreover since the petitioner is not seeking enforcement of any statutory right or any statutory obligation casts upon the Corporation it is not open to her to invoke the extraordinary jurisdiction under Article.226 of the Constitution of India. The 2nd respondent filed a separate counter-affidavit stating that he is at present working as Chief Regional Manager, Navi Mumbai LPG Regional Office and denying all the allegations made by the petitioner against him in his individual capacity. It is further stated that he had acted only in his official capacity of the Senior Regional Manager while issuing show cause notice on the basis of the complaint received from one Shoukath Humera and that the allegations that he was continuously harassing the petitioner on one pretext or other and that he influenced the 1st respondent to terminate the dealership were absolutely false. While reiterating that he had no mala fide intention in initiating action against the writ petitioner. It is explained that the action initiated against the petitioner was on the basis of the irregularities found in the investigation conducted against the petitioner and in accordance with law. As noticed above, it is primarily contended on behalf of the petitioner that the impugned order of termination is in violation of the principles of natural justice, firstly for the reason that the copies of the reports of the enquiry said to have been made by the Corporation were not furnished to the petitioner and secondly that the termination was affected on the grounds which were not specified in the show-cause notice. In support of the said contention, the learned counsel for the petitioner relied upon the decisions of this Court in D. SATHI REDDY v. COMMISSIONER, PANCHAYAT RAJ, A.P., HYD.[1] and K. RADHAKRISHNA NAIDU v. DIRECTOR OF CIVIL SUPPLIES[2]. It is to be noted that in the show-cause notice dated 27.01.2007 itself the irregularities alleged against the petitioner were specified mentioning all the details. The lists of customers who were allegedly given unauthorized connections were also annexed to the said show- cause notice. In response to the said show-cause notice, the petitioner in her Reply dated 5.2.2007 while denying the allegations requested to provide the copies of complaints. Accordingly, the Corporation by letter dated 05.03.2007 furnished a copy of the complaint made by Ms. Shoukath Humera along with a copy of Subscription Voucher No.4553618, dated 14.07.1997 with Consumer No.520291 and Dealer Code 952360. In the said letter, while specifically mentioning that the irregularities listed in the show-cause notice dated 27.01.2007 were major irregularities, two other major irregularities detected in the past were listed as under : (1) A refill Audit was conducted at your M/s. Satyatulsi Agencies, Tarnaka Point, on 05.09.05 by our Executive Sales Officer and detected the diversion and levied a penalty of Rs.20,736/- and the penal amount was remitted vide your letter dated 17.10.2005 and acknowledged vide our Cash receipt No.5017440, dated 20.10.2005. (2) Similarly one more refill audit was conducted at your M/s. Satyatulsi Agencies, Shantinagar Point on 06.09.05 by our Executive Sales Officer and detected the diversion and levied a penalty of Rs.32,559/- and the penal amount was remitted by you vide your letter dated 17.10.2005 and acknowledged by us vide our Cash receipt No.5017439, dated 20.10.2005. The petitioner was also given an opportunity to submit a further reply, if any, in addition to the replies already given. Having received the said letter of the Corporation together with the enclosures, the petitioner gave a reply dated 10.03.2007 requesting three weeks time to submit her detailed reply as the documents were nearly 10-years old. The petitioner also requested to supply the original documents for examination to establish the authenticity. The Corporation gave a reply dated 13.03.2007 stating that since the show-cause notice dated 27.01.2007 and the further notice dated 5.3.2007 were issued based on the details available in the records submitted by the petitioner in the past the same should have been available with the petitioner also and at any rate if the petitioner still wanted to peruse the documents available with the Corporation the petitioner may do so with an advance intimation of at least 24 hours. So far as extension of time sought by the petitioner for submitting the explanation, the petitioner was granted extension of seven (7) days from the date of receipt of the said letter making it clear that if the petitioner fails to submit the explanation within the said time it would be construed that she had no further explanation to offer and the Corporation would proceed further in the matter as deemed fit. In response to the same, the petitioner by letter dated 22.03.2007 again made a request for extension of time since many of the documents required to be checked were very old. Thereafter, though the Corporation did not address any letter extending the time as sought by the petitioner, it is not in dispute that no coercive steps were taken till the impugned order was passed on 26.09.2008. In spite of such a long time of more than an year available, the petitioner did not give any further reply to the Corporation nor furnished any material to show that the allegations made against her were unfounded. In the circumstances, the impugned termination order came to be passed on 26.09.2008 recording a clear finding that the allegations of issuance of unauthorized connections by the petitioner by inducting spurious equipment and using the unauthorized stationery in addition to overcharging from nine customers to whom new connections (both authorized and unauthorized) were issued were established. There can be no dispute about the ratio laid down in D. SATHI REDDY’S case (1 supra) and K. RADHAKRISHNA NAIDU’S case (2 supra) that failure to furnish the copies of the material documents upon which the impugned orders are based deprives the person against whom the action is proposed an adequate opportunity to submit his explanation thus resulting in violation of principles of natural justice. However, in the case on hand the material available on record shows that all the relevant documents were made available to the petitioner and she was also given an opportunity to peruse the documents available in the office of the Corporation. As a matter of fact, all the irregularities pointed out in the show-cause notice were detected from the records maintained and submitted by the petitioner herself during the course of the business. The said fact which was clearly mentioned in the Corporation’s letter dated 13.03.2007 was not controverted by the petitioner at any point of time but she had only sought for extension of time for submitting her reply on the ground that the documents to be checked were very old. Having requested for extension of time, the petitioner kept quiet and did not submit any further explanation for more than an year. In the circumstances, the respondent Corporation cannot be faulted in passing the impugned order of termination on the basis of the replies already submitted by the petitioner on 5.2.2007, 14.2.2007, 10.3.2007 and 22.3.2007. A perusal of the impugned order also shows that it is supported by sufficient reasons in support of the conclusions reached. The allegation of the petitioner that the impugned termination was on the grounds not specified in the show-cause notice is factually incorrect. In continuation of the show-cause notice dated 27.01.2007 a further notice was issued on 5.3.2007 specifying two more irregularities and granting sufficient time to the petitioner to explain. All the said irregularities were substantiated by the documentary evidence, the authenticity of which could not be disputed by the petitioner. Hence, the contention of the petitioner that the enquiry was held behind her back and that the impugned order was arbitrary and in violation of principles of natural justice is untenable and cannot be accepted. However, the learned counsel for the petitioner further contended that the penalty of termination of agreement is highly disproportionate to the alleged irregularities and unwarranted and at any rate the same is contrary to the provisions of the Marketing Discipline Guidelines. At the outset, it is to be noted that the irregularities alleged against the petitioner, which included acceptance of fake transfer vouchers and induction of spurious equipment and unauthorized release of LPG connections, are grave in nature. As per the Marketing Discipline Guidelines the termination of dealership agreement is provided for the third violation and in case of first and second time violations imposition of penalty has been provided. Admittedly the petitioner was earlier imposed two penalties on 3.1.2005 for major irregularity of overcharging on Suraksha Hose and delayed Refill supply. Again in December, 2005 the petitioner was imposed penalty for another major irregularity. The petitioner never challenged the said penalties on any ground whatsoever and they became final. Hence the impugned order of termination cannot be held to be contrary to the Marketing Discipline Guidelines much less opposed to the concept of proportionality. At any rate, the Dealership Agreement between the petitioner and the Corporation not being a statutory agreement, the obligations if any on the part of the Corporation arising out of such agreement cannot be dealt with under Article 226 of the Constitution of India. All the rights and liabilities are regulated by the terms and conditions of the agreement itself voluntarily entered into between the parties and the agreement also contains a specific clause for arbitration. Hence, even assuming that the impugned termination is in breach of any of the terms and conditions agreed upon, it is not open to the petitioner to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. Accordingly, it is left open to the petitioner to seek arbitration in terms of the Dealership Agreement making it clear that if any such proceedings are taken up the same shall be considered and decided in accordance with law. Subject to the above observations, the Writ Petition is dismissed. No costs. ______________ G. ROHINI, J. Dt. 04 .02.2009 Tsnr/gbs [1] 1999 (5) ALD 681 (D.B.) [2] 1996 (1) ALD 473