* THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION NO.18572 of 1994 % Dated 05.01.2007 # S.Suresh, S/o.Sadagopan, 40 years, Business, Residing at H.No.6- 3-855/1, Sadat Manzil, Begumpet, Hyderabad-16. . …. Petitioner Vs. $ M/s.Indian Oil Corporation Limited, rep.by General Manager (Marketing Operations), Southern Region, Indian Oil Bhavan, 139, Nungambakkam High Road, Madras-600 034 and another. …. Respondents ! Counsel for the Petitioner: Sri V. Ravinder Rao ^ Counsel for the Respondent: Sri R. Raghunandan. <GIST: > HEAD NOTE: ? Cases referred [1] (2005)8 SCC 242 2 (1991)1 SCC 533) 3 (2003)2 SCC 107 4 (2000)7 SCC 764 5 2004(3) ALD 463 6 2004(2) SCC 150 7 AIR 1990 AP 171 8 (2004) 14 ILD 395 (SC) 9 (2002) 5 ALD 389 10 AIR 1952 SC 16 11 AIR 1978 SC 851 THE HON'BLE MR JUSTICE RAMESH RANGANATHAN WRIT PETITION NO.18572 of 1994 ORDER: Seeking a declaration that the order of the first respondent in proceedings No.R.SCD.132 dated 21.09.1994, terminating the Retail Outlet agreement with the petitioner, is illegal and arbitrary and for a consequential direction to have the order set aside, the present Writ Petition is filed. The petitioner was appointed as a dealer of the first respondent-Corporation, for running a Retail Outlet for High Speed Diesel (HSD), under the name and style of Sree Rama Service Station at Autonagar, Ranga Reddy District. This Retail Outlet was established pursuant to the permission granted by the respondent Corporation in its letter dated 16.03.1979. The impugned order dated 21.09.1994 refers to the inspection of the retail outlet on 28.12.1991. The Inspection report dated 28.12.1991, in turn, refers to the earlier inspection reports dated 28.09.1991 and 24.08.1991. In the Inspection report dated 24.08.1991 it is stated that the stock particulars were within permissible limits, the density test and the fuel was O.K, that the H.S.D. Pump was showing slow delivery, that the hosepipe needed to be replaced, that the tube lights of the pump were not functioning, that the retail outlet was mismanaged, the dealer was absent and disinterested in business and that he should report to the Divisional office for discussion. Petitioner would contend that it is for the Corporation to change the pump and the hosepipe whenever necessary and to maintain proper illumination at the Retail Outlet, and it is not his responsibility to do so. According to the petitioner the observations in the report, that the Retail Outlet was mismanaged, that the dealer was absconding and was disinterested in the business, were baseless, not substantiated, did not reflect the true state of affairs and were made with the ulterior motive of depriving the petitioner of his business. Subsequent thereto another inspection was held on 28.09.1991, wherein also the second respondent found the stock particulars to be within limits and the density to be O.K. Petitioner would submit that, though the Corporation had not changed the hosepipe which, in the inspection held on 24.8.1991, was found to be defective, the second respondent in his report dated 28.09.1991 had observed that the equipment was functioning normally, and that the very same officer had submitted two contradictory reports within a span of a month. The second respondent, in his report dated 28.09.1991, observed that the Retail Outlet was neglected, the Dealer was absconding and was disinterested in business, that the pump pedestal had to be reconstructed and that the pump tube lights had to be repaired. According to the petitioner these works were required to be carried out by the Corporation and it was only to cover up their lapses that the respondents had made unfounded and motivated allegations against him. A third inspection was held and, in his report dated 28.12.1991, the 2nd respondent observed that there was an excess of 348 liters on a sale of 1,55,349 liters, which was beyond permissible limits. Petitioner would submit that in the earlier report dated 28.09.1991, while the variation of minus (-) 176 liters on sales of 48,061 litres was found to be within permissible limits, curiously in the inspection report of 28.12.1991, excess stock of plus (+) 348 liters on sales of 1,55,349 liters was held to be beyond permissible limits. According to the petitioner, these findings were contrary to the norms prescribed in G.S.R.811 (e) dated 27.12.1990 issued under the Essential Commodities Act, 1955 and the allegations, in the reports, were made with an ulterior motive and with a vindictive attitude. Petitioner would allege that on 28.12.1991, while the petrol tank was empty and a sample was taken by squeezing petrol from the tank, the density was however not recorded and that such extraction of the sample was in contravention of the norms prescribed in G.S.R.811(e) dated 27.12.1990. Petitioner would contend that the observations in the report dated 28.12.1991, that the retail outlet was neglected, that the dealer could not to be traced, and that the dealer should report to the divisional office immediately, were not warranted, without any basis and were made only with a view to victimize him. Petitioner would submit that, as against the quantity indented and prepaid from 17.12.1991 to 28.12.1991, the quantity actually delivered was far less and, having failed to supply the quantity indented for, the observations of the second respondent, in these three reports, that the Retail Outlet was neglected was highly arbitrary and unreasonable. Consequent to the inspection report dated 28.12.1991, the second respondent ordered stoppage of sales in the Retail Outlet. Petitioner claims to have visited the office of the second respondent and to have demanded that they give reasons for making these observations in the inspection reports. Petitioner contends that the second respondent had not chosen either to give reasons or to substantiate the observations made in the inspection reports. The Corporation, vide letter dated 02.01.1992 received by the petitioner on 13.01.1992, informed him that the stock variation was found to be beyond the permissible limits, that the Retail Outlet was not maintained properly and that sales should not be resumed until further advise. Petitioner would contend that stoppage of sales had caused him irreparable loss, apart from loss of reputation, which necessitated his having to issue legal notice dated 13.01.1992. The respondents issued notice dated 14.01.1992, received by the petitioner on 21.01.1992, without reference to the legal notice sent by the petitioner on 13.1.1992. Petitioner filed O.S.No.60 of 1992, before the Subordinate Judge, Ranga Reddy District on 13.02.1992, against the respondents, seeking damages of Rs.6,00,000/- (Rupees six lakhs). Respondents filed an application, in I.A.No.340 of 1992, under Section 34 of the Arbitration Act, 1940 seeking stay of all further proceedings in the suit placing reliance on the arbitration clause in the agreement dated 13.07.1984, which the petitioner claims not to have signed. Thereafter, the impugned order dated 21.09.1994 was passed terminating the agreement. The petitioner, while denying execution of any such agreement, would contend that the Corporation has no power to cancel the dealership, that the action of the respondents, in passing the impugned order dated 21.09.1994 terminating the agreement, was violative of Articles 14 and 19 (1) (g) of the Constitution of India, that the dealership licence is property and that he could not be deprived thereof without following the procedure prescribed by law and the very fact that the impugned order was passed, after a lapse of more than 2 ½ years after the suit was filed, would show that it was not a bonafide act and was vitiated by extraneous considerations. Respondents, on the other hand, would contend that the Writ Petition as filed is not maintainable as the dealership was terminated in accordance with clause 58 of the agreement and that the remedy, if any, available to the petitioner to enforce his rights was by approaching the appropriate forum and not by way of a Writ Petition under Article 226 of the Constitution of India. It is stated that, after litigation commenced in 1992, the petitioner had stopped approaching the respondent Corporation for supply of HSD, that the last supply was made before March, 1992 and thereafter, the Retail Outlet was not in operation. It is also stated that the landlord had filed a suit against the petitioner and had evicted him from the Retail Outlet, that there had been no proposal, thereafter, for resitement of the Retail Outlet and that the Writ Petition has, therefore, become infructuous. Respondents would submit that the retail outlet premises was being inspected by the first respondent Corporation, from time to time, eversince the inception of the dealership in 1979, that the petitioner did not evince any interest in operating the retail outlet and that he was warned on several occasions that such negligence, and mismanagement of the retail outlet, would result in cancellation of the dealership. While stating that several letters were addressed to the petitioner, respondents would rely on a few such letters in the counter affidavit and contend that these letters would show that the petitioner had mismanaged the retail outlet and had caused loss to the corporation due to low sales. It is stated that the respondent corporation makes an assessment of the sales potential of each retail outlet, taking into consideration the sales of other retail outlets in the vicinity, including sales outlets of other petroleum corporations, the traffic in the area and the future potential of the area. On that basis, the sales potential of the petitioner’s retail outlet was assessed to be in the region of 650 KL per month whereas the overall sales of the outlet was less than 60 KL per month. Respondents would deny the allegations that the petitioner was managing the retail outlet properly and that they had made false and baseless allegations against him. Respondents would submit that the petitioner had, in fact, informed them that he was not in a position to bring in the necessary finance for proper management and operation of the retail outlet and had requested them to permit him to bring Sri R. Krishnaswamy as a partner in the dealership, so that adequate finance could be pumped in to increase sales in the retail outlet and, while the proposals had been recommended by the Committee appointed by the corporation, the petitioner did not induct Mr. Krishnaswamy into the firm and continued to neglect the retail outlet. Respondents would submit that the petitioner was asked to explain as to how the hose had got damaged but he did not choose to give any explanation nor did he bother to approach the officials for rectification of the hose. According to the respondents, the responsibility for proper illumination was on the petitioner, the safety standards maintained by the petitioner were also low, the staff of the petitioner at the retail outlet were using a kerosene stove for cooking within the licensed premises of the retail outlet and, instead of ensuring that there was no possibility of accidental fire, the petitioner’s staff had themselves indulged in such activities which could have resulted in the retail outlet being burnt down. Respondents would submit that, while the dealership agreement stipulated that the petitioner should sell only the petroleum products of the respondent Corporation and that other products should not be sold in the retail outlet, the various inspections revealed that the petitioner was purchasing lubricants from other sources and selling them in the retail outlet and that such sales of sub-standard products had resulted in loss of their reputation as the general public would assume that the lubricants being sold by the petitioner were the genuine lubricants of the respondent corporation. It is stated that the petitioner was not available at the retail outlet or at any other place for communication with the officials of the corporation. Respondents would deny any ulterior motive for making the observations in the inspection reports and would submit that the earlier letters addressed by the corporation to the petitioner would show that, right from the date on which the retail outlet was established, the petitioner had never evinced interest in running the retail outlet and that mismanagement of the retail outlet continued despite various reminders. It is stated that the petitioner never visited the office of the respondents to explain the reasons for the low sales and poor maintenance in person, that during inspection the petitioner was never present and could not even be contacted and it was for these reasons that the inspection reports contained a note that the petitioner was disinterested in his business and that the retail outlet was mismanaged. Respondents would submit that its officers did not bear personal grudge against the petitioner and that the reports submitted by them were based on the actual findings during the course of inspection that the petitioner was not found in the retail outlet, he did not evince any interest in running the retail outlet and, as there was no interaction with the officials of the respondent corporation, specific observations were made in the report that the retail outlet was neglected and that the dealer was not interested in the business. With reference to the report dated 28.12.1991, it is stated that the quantity of excess stock found was beyond permissible limits and automatically attracted penalties and other charges as prescribed under the contract. Respondents would deny the contention that the stock found was within permissible limits prescribed under GSR-811 (e) dated 27.12.1990. They would submit that the samples drawn by them were in conformity with the prescribed norms, that while the Corporation always ensured that the entire quantity indented was supplied, if there was a shortfall in supplies, on rare occasions, it was immediately made up in the next supply. According to the respondents, due to paucity of time, the allegations made by the petitioner could not be verified with reference to the records relating thereto. It is stated that, whenever stock variations are found, sales are directed to be stopped. Respondents would submit that, over a period of time, the petitioner was not taking any interest in the operation of the retail outlet and left its operations to his staff and as his negligence had resulted in fall in sales at the retail outlet, his explanation was called for. Respondents would deny the allegation that the petitioner did not sign the agreement and would submit that the petitioner had signed the agreement on behalf of M/s. Sree Rama Service Station. It is stated that no stocks were taken by the petitioner, from the respondents, pursuant to the interlocutory application filed by the respondents in the suit to have the matter referred to arbitration, that the order of termination was not passed immediately and that the delay was on account of the petitioner having initiating litigation. Respondents deny the allegation that the order was passed belatedly and state that the petitioner was fully aware of the charges made against him and did not bother to take any steps to appear before the officials of the respondent Corporation. Sri V. Ravinder Rao, learned counsel for the petitioner, would submit that the deficiencies pointed out in all the three inspection reports of the 2nd respondent dated 24.8.1991, 28.8.1991 and 24.12.1991, with regards slow delivery of the hose pipe, absence of light, reconstruction of the pump pedestal etc, were matters which the respondent –corporation was required to rectify. Learned Counsel would refer to clauses 13, 14, 16 and 17 read with annexure II of the agreement and submit that in the impugned order dated 21.9.1994, terminating the agreement in exercise of the powers under Clause 58(m), the only discrepancies referred to were in relation to the inspection conducted at the retail outlet on 28.12.1991 and, as these discrepancies required rectification not by the petitioner, but by the respondent– corporation itself, the impugned order was liable to be set aside as arbitrary and illegal. Learned counsel would submit that the impugned order, terminating the agreement, was passed only on the basis of the inspection report dated 28.12.1991 and, as nothing adverse was pointed out even in the immediately preceding two inspection reports dated 24.8.1991 and 28.12.1991, it was not open to the respondents to rely on past events or to refer to earlier correspondents in justification of their action in terminating the agreement. Learned counsel would submit that it is not open to the respondents to supplement the grounds for terminating the agreement placing reliance on certain other correspondence, which though not reflected in the impugned order has been referred to in the counter affidavit. Learned counsel would submit that, while the agreement contains an arbitration clause, in the present case the impugned order violates the fundamental rights of the petitioner under Articles 14 and 19(1)(g) of the Constitution of India. According to the learned Counsel, as it was passed without putting the petitioner on notice and without application of mind, the impugned order was in violation of the principles of natural justice. Learned counsel would submit that, in cases where fundamental rights are violated or the impugned order is in violation of principles of natural justice, mere existence of an alternative remedy is no bar for exercise of jurisdiction under Article 226 of the Constitution of India, more so, when facts are not in dispute. Learned counsel would place reliance on Sanjana M. Wig v. Hindustan Petroleum Corporation[1], Indian Oil Corporation Ltd v. Amritsar Gas Service[2], Harbanslal Sahnia v. Indian Oil Corporation Ltd[3], and E. Venkatakrishna v. Indian Oil Corporation[4]. Learned counsel would submit that in the present case, since the facts are not in dispute, no oral evidence is required to be adduced, the impugned order and the decision of the respondent – corporation in terminating the agreement is in the realm of public law and as the decision is arbitrary and in violation of the petitioner’s fundamental rights under Articles 14 and 19(1)(g) of the Constitution of India, this Court would not refuse to exercise its discretion, under Article 226 of the Constitution of India, to entertain and adjudicate the cause in the writ petition. Learned counsel would submit that, since the reply submitted by the petitioner to the earlier inspection reports was ignored and as the domestic forum of arbitration, under the agreement, did not confer on the arbitrator the power to grant the relief sought for in this writ petition, the petitioner should not be non-suited on the ground of existence of an alternative remedy either by way of arbitration or by way of a civil suit before the civil court of competent jurisdiction. Sri R. Raghunandan, learned counsel for the respondent– corporation, on the other hand, would refer to the earlier correspondence right from 1987 wherein the petitioner had been repeatedly advised to rectify the deficiencies and to improve the functioning of the retail outlet. Learned counsel would refer to a few of such letters dated 6.4.1987, 21.3.1989, 16.11.1989, 9.2.1990 and 23.3.1990 to submit that, despite repeated requests calling upon the petitioner to come over in person for discussion with the officials of the respondent–corporation with a view to improve the functioning of the retail outlet, the petitioner had failed to do so. Learned counsel would submit that, as the petitioner had neglected the retail outlet, and its poor performance had adversely affected the reputation of the corporation, the respondents had no alternative but to invoke the power, conferred under Clause 58(m), to terminate the agreement. Learned counsel would submit that, while the respondent–corporation may be an instrumentality of the State, under Article 12 of the Constitution of India, the dealership agreement with the petitioner was, however, non-statutory. Learned Counsel would submit that since contractual disputes are in the private law realm, the public law remedy under Article 226 of the Constitution of India would not, normally, be permitted to be invoked. Learned Counsel would submit that, since the impugned order terminating the dealership agreement is not traceable to any statutory provision nor was it a quasi-judicial order, the requirement that reasons should be forthcoming in the order itself and cannot be supplemented by way of additional evidence, has no application. Learned Counsel would submit, that in all the inspection reports, it has been observed that the retail outlet has been neglected and that the petitioner should come over for discussion to the divisional office of the respondent corporation. According to the learned Counsel what was referred to in the Inspection reports is but a reiteration of the earlier instances of neglect of the retail outlet, which was highlighted in the earlier correspondence between the petitioner and the respondent – corporation. Learned counsel would submit that the petitioner had chosen not to rectify the earlier deficiencies and had referred only to the inspection reports with a view to shift the blame on the respondent– corporation, though he had, right from the inception, had neglected the retail outlet and had failed to maintain the prescribed standards. Learned Counsel would submit that the earlier correspondence referred to would establish that the petitioner was responsible for the poor performance of the retail outlet and that, in any event, these were all matters which were to be adjudicated after evidence was adduced either before the arbitrator or the civil court of competent jurisdiction and not in summary proceedings under Article 226 of the Constitution of India. Learned Counsel would submit that, during the pendency of proceedings before this Court, the landlord had evicted the petitioner from the premises in which the retail outlet was hitherto being run and, since the premises wherein the retail outlet was located was no longer available, the cause in the writ petition has become academic and no relief could be granted to the petitioner. The distinction between public law and private law assumes significance as this Court would not, ordinarily, exercise its extra- ordinary jurisdiction, under Article 226 of the Constitution of India, to adjudicate disputes in the private law realm. Public law is a system which enforces the proper performance by public bodies of the duties which they owe to the public. Every body which is created by a statute, and whose powers and duties are defined by the statute, is a ‘public authority’. Private law is a system which protects the private rights of private individuals or the private rights of public bodies. Distinction therein is that the public as a whole is the beneficiary of what is protected by public law and it is the individuals or bodies entitled to the right which are beneficiaries of the protection provided by private law. The respondent corporation, in carrying on its business of sale of petroleum and its products, does not discharge any public law functions or duties. Not all decisions taken by bodies in the course of their public functions are subject-matter of judicial review. In the following two situations judicial review will not normally be appropriate even though the body may be performing a public function: (a) Where some other branch of the law more appropriately governs the dispute between the parties. In such a case, that branch of the law and its remedies should and normally will be applied; and (b) Where there is a contract between the litigants. In such a case the express or implied terms of the agreement should normally govern the matter. This reflects the normal approach of English law, namely, that the terms of a contract will normally govern the transaction, or other relationship between the parties, rather than the general law. Thus, where a special method of resolving disputes (such as arbitration or resolution by private or domestic tribunals) has been agreed upon by the parties (expressly or by necessary implication), that regime, and not judicial review, will normally govern the dispute.” (Desmith, Woolf and Jowell’s Judicial Review of Administrative Action, 5th Edition; Hindustan Petroleum Corporation v. Ali Jafar[5]) Public duty can never be equated to that of an obligation to any person or identifiable group of persons. Public duty is owed to the public in general and not specifically to any person or group of individuals. That is the precise character of public law duty in contra distinction to private law, which is normally founded upon