THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P.NO.26180 2005 ORDER: This writ petition has been instituted questioning the correctness and validity of the orders passed by the respondent – Indian Oil Corporation Limited (for short “the Corporation”), terminating the dealership agreement entered into by and between the parties on 27-11-2000. It is the case of the writ petitioner that pursuant to a notice inviting applications from interested parties for establishing a retail outlet for sale of petroleum and petroleum products the writ petitioner has responded offering to establish an outlet at Padugupadu Village, Nellore Town. The Corporation entered into a dealership agreement on 20-03- 1989 awarding the dealership to the writ petitioner for a period of 10 years for establishing, operating and running a petroleum outlet at Padugupadu Village. The agreement has specified certain minimum quantities of petroleum and petroleum products to be lifted every month by the dealer and those targets have been successfully met with by the petitioner and, in fact, he has lifted more quantities of stock than the minimum quantities required to be lifted by him. Considering his satisfactory performance of sale, the Corporation has offered to take the site belonging to the petitioner on lease basis for a period of 30 years and awarded the dealership in favour of the petitioner. Another dealership agreement has, accordingly, been entered into on 27-11-2000 and in Clause-9 thereof, the minimum quantities of stock to be lifted per month have been specified with a steep increase from the previous quantities. A show-cause notice has been issued by the Corporation on 16-09-2005 alleging that the writ petitioner had failed to lift the minimum required quantities of petroleum and petroleum products of the Corporation for a period of more than 3 consecutive months in the past six months and thus the terms and conditions of the dealership agreement have been breached and hence, the Corporation has proposed to terminate the dealership agreement of the writ petitioner. The writ petitioner filed his detailed reply thereto on 26-09-2005, but however, not finding any merit in the reply furnished by the petitioner, the respondent Corporation has passed the impugned order dated 10-11-2005 terminating the dealership of the writ petitioner. Hence, the present writ petitioner has been filed. I have heard Sri M. Ravindranath Reddy, learned counsel for the petitioner and the learned Standing Counsel for the respondent Corporation. Sri Ravindranath Reddy has raised the following contentions: 1. the impugned order has been passed in utter violation of the principles of natural justice; 2. the impugned order has been passed without properly considering the explanation offered by the writ petitioner; 3. the impugned order has been passed without any regard to the facts and circumstances, which are existing in the locality, which have adversely impacted the sales of petroleum and petroleum products; 4. the impugned order has been passed without having any regard to the fact that the Corporation itself has failed to invest in improving the appearance and other facilities available at the outlet; and 5. the impugned order has been passed without any regard to the factual situation that inspite of the best efforts put in by the writ petitioner to improve the sales it could not be achieved for reasons beyond his control. During the course of his submission, the learned counsel for the petitioner has also drawn my attention to the contents of the additional affidavit and the additional material papers filed in support of his plea that in the post impugned-order -period the writ petitioner has substantially improved his financial capacity to run and operate the outlet and in spite of the same, the Corporation has not bothered to allot the petroleum and petroleum products to him to enable him to sell the same. The learned Standing Counsel has stoutly disputed the contention that the impugned order has been passed in violation of any principle of natural justice or that it has been made without any regard to ground realities. On the contrary, he has pointed out that for the breach of the terms of the agreement, the impugned order has been passed and hence, a writ petition, under Article 226 of the Constitution of India, is not the proper remedy for deciding the disputes arising out of a dealership agreement between the parties. The learned Standing Counsel has also pointed out that the consistently downward performance of sales by the petitioner has only reflected lack of proper care and anxiety on the part of the writ petitioner to bestow attention in the matter of performance of the retail outlet. The learned Standing Counsel has also pointed out that the reasons attributed for the failure to lift the minimum quantities of petroleum and petroleum products are imaginary and, in fact, the sales achieved by other petroleum outlets in the locality demonstrate that the fact situation does not warrant any inference to be drawn about the potential downtrend in demand for the petroleum and petroleum products in the locality in which the retail outlet of the petitioner is situated. He further pointed out that the dealership agreement itself provides for an alternative mechanism for resolution of disputes by way of reference to arbitration and hence, it is not permissible for the writ petitioner to circumvent an effective alternative remedy contemplated by the agreement itself and sidestep the same by instituting this writ petition. This apart, even as per the latest policy announced by the Ministry of Petroleum and Natural Gases, Union of India, an Appeal would lie against the decision of termination of the retail outlet dealership and the same is bound to be considered by the Executive Director, who is fairly a high-ranking official of the Corporation. It is not very difficult to understand that during the first ten-year period of dealership the writ petitioner has performed all the obligations arising thereunder to the reasonable satisfaction of the Corporation. Hence, after the end of the ten-year initial period, the Corporation had entered into a dealership agreement with the writ petitioner for a second time on 27-11-2000. There are certain obligations that have been created by the said agreement. It is, therefore, relevant to look at those obligations, which have been enshrined in Clause-9, which are to the following effect: “9. The Dealer undertakes to further the sales of the Corporation’s petroleum products. It is specifically agreed and declared that it is a basic condition of the grant of the Dealership rights by the Corporation to the Dealer herein that the Dealer hereby agrees, undertakes and covenants to uplift and pay for the following minimum quantities of the Corporation’s petroleum and petroleum products per month as specified here under: PRODUCT QUANTITY Motor Spirit 20 kl HSD 200 kl Motor Oil } Grease } 1.5 kl Other Products viz. } The Corporation shall have the absolute right to revise the aforesaid sale targets from time to time. It is specifically agreed that in the event of the Dealer not achieving the aforesaid minimum turnover at any time during three out of any six consecutive months during the currency of this Agreement, the Corporation shall be entitled, not- withstanding any acquiescence or waiver of this condition in respect of any one or more months and notwithstanding any other provisions herein contained, to terminate this Agreement by giving one month’s notice to the Dealer.” This apart, Clause- 54 of the agreement also creates an additional right for the Corporation to terminate the dealership agreement in case any of the conditions of the agreement have been found to be breached by the petitioner. It is not in dispute that the writ petitioner has not complied with the obligations cast upon him under Clause-9 of the dealership agreement. He has not lifted the minimum quantities of petroleum and petroleum products liable to be lifted by him and consequently, he could not sell those products. In other words, the sale of petroleum and petroleum products of the Corporation from the retail outlet of the petitioner has fallen far short of the minimum expected returns to the Corporation. It is no doubt true that the respondent Corporation is Government of India owned Public Sector Enterprise, but nonetheless, the essential feature of its performance is squarely dependent upon the sale of its products through the various retail outlets. If there was any slump in the sales of the products of the Corporation, it would adversely impact the revenue of the Corporation. Therefore, the effective way that the respondent Corporation will be able to carry on it’s business, centers around its ability to push through its products through its network of retail outlets. It will be important to notice that revenue is liable to be generated by the Corporation only through sale of its products and any slow down in its sales is, therefore, bound to visit the Corporation with adverse financial results and consequently, will also produce an adverse impact upon its functioning. Hence, fixation of monthly minimum quantities to be lifted by each of its retail outlets is one way of securing a reasonable quantum of sales of its products. The writ petitioner in his explanation to the show-cause notice has pointed out the reasons for his failure as under: 1. Traffic diversion in new Bye pass Road. 2. Due to bad debts in credit sales tuning to 10 lakh Rupees. 3. My diversification to prawn culture which thrown me in to deep waters. 4. Too many ROs came in my market area.” He left a positive hint behind in his explanation that because of his various other business activities pursued, he is not in a position to carry on the operations of the retail outlet properly, resulting in shortfall of the targeted monthly sales. The other reasons attributed by him such as formation of a new bye- pass road on the national highway resulting in the vehicular traffic scipping the Nellore Town and establishment of few more retail outlets in the vicinity, do not lend much support to his contention. The fact that a bye-pass road has been constructed on the national highway resulting in diversion of the vehicular traffic cannot be a factor, which can be believed to have impacted the sales of the petroleum and petroleum products for the writ petitioner’s outlet. There was an increase in the number of motor vehicles and, therefore, the demand for petroleum and petroleum products was ever increasing. If there was no potential for the requirement of petroleum and petroleum products, the other public sector oil companies would not have ventured to establish their retail outlets in the same locality and similarly, a private oil company also would not have established a retail outlet for sale of its products in the vicinity of the writ petitioner’s outlet. The following information relating to sales achieved by the other retail outlets in the vicinity, would demonstrate the lack of tenability of his claim: Petitioner outlet MONTH MS (KL) HSD (KL) LUBES March 05 16 92 1.4 April 05 20 40 0 May 05 4 32 0 June 05 8 16 0 July 05 8 36 0 Aug 05 8 16 0 Other outlets Month DS Auto (BPC) Services General Auto (HPC) Sri Devi Oil Ag (IOC) MS HSD MS MS HSD March 05 50 350 28 8 160 April 05 50 310 28 8 136 May 05 50 290 28 8 112 June 05 50 290 28 8 148 July 05 40 280 28 8 148 Aug 05 50 330 28 12 144 BPC : Bharat Petroleum Corporation HPC : Hindustan Petroleum Corporation IOC : Indina Oil Corporation In fact, the impugned order as well as the counter affidavit made the position very clear, that the sales of petroleum and petroleum products achieved during the corresponding period by the other retail outlets in the vicinity would go to establish that there is no dearth of vehicular traffic resulting in drop in demand for petroleum and petroleum products in the locality. If the writ petitioner, all due to his financial constraints, could not lift the required stock from the respondent Corporation, he could not have correspondingly pushed through the sales. It is, therefore, clear to my mind that there is no other social factor that could be said to have come in the way of the writ petitioner not to perform the obligations thrust upon him under the dealership agreement. But, it is his own financial constraint that has bought about this position. It will be important to notice that at no point of time after the dealership agreement has been entered into fixing the monthly targets on 27-11-2000, did the writ petitioner suggest to the Corporation to downsize the monthly minimum quantities to be lifted by him, in view of the aforesaid factors pleaded by him. If any such request has been made, perhaps, necessary steps would have been undertaken by the respondents Corporation to undertake a study of the same. Since, no such attempt has been made by the writ petitioner and for the first time he has come up with such a plea in reply to the show-cause notice, it clearly indicates that the said reasons have been invented for offering some justification for his failure to push through the sales of required quantities. At any rate what factual reasons and factors weighed with the writ petitioner for his non-performance of a term of a contract cannot be the subject matter of judicial review in a proceeding under Article 226 of the Constitution of India. Such factors are bound to be agitated elsewhere and perhaps in that context, the plea of the learned Standing Counsel that the mechanism of arbitration, which has been contemplated by the contract as one of the modes for dispute resolution, would acquire importance. Perhaps, appropriate material could have been gathered by collecting evidence, if such an option has been exercised by the writ petitioner and a finding of fact would have been recorded in such an event. However, the writ petitioner has not chosen to avail such a remedy. I am, therefore, unable to agree with the contentions of the learned counsel that the impugned order has been passed in breach of principles of natural justice or that all the relevant factors have not been taken into consideration. On the contrary, the Corporation has provided a fair opportunity for the petitioner to set forth his case in detail. His objections here all been taken into account and a reasoned order has been passed by the Corporation. In a judicial review proceeding, it is well to remember that, this Court is not reviewing the ultimate decision, but is concerned with the decision making process alone. The learned counsel for the petitioner has also drawn my attention to the pleadings set up by filing additional affidavit and additional material papers. Great emphasis has been laid upon the fact that the writ petitioner has since disposed off some of his immovable properties and he has substantially improved his financial wherewithal to effectively enable him to lift the petroleum and petroleum products in the post- impugned-order period. Perhaps, this material would further lend support to the claim of the Corporation that it is the financial distress of the writ petitioner and not any other factor, which was squarely responsible for his failure to lift the stocks as required by the dealership agreement, and the same gains credence. It is, therefore, not possible for this Court to pronounce an opinion on the basis of the contents of the additional affidavit and the material placed by way of additional material papers about the validity of the impugned order. If the Corporation has not chosen to reconsider the entire matter, no fault can, perhaps, would lie at its doorstep. As is noticed supra, a change in the guidelines announced by the Ministry of Petroleum and Natural Gas, Union of India, had provided for an effective alternative remedy of preferring an Appeal against any orders of termination of dealership. Unfortunately, the writ petitioner has not availed the same. If any such remedy is availed, perhaps, the Executive Director of the respondent Corporation would have considered the entire matter in its proper perspective and would have taken a decision in the matter. The learned counsel for the petitioner has placed reliance upon the following judgments, but however, they are of no avail to him and his cause. 1. INDIAN OIL CORPORATION LIMITED v. AMRITSAR GAS SERVICE AND OTHERS[1]. 2. MIR SABIR ALI v. COMMISSIONER OF POLICE, HYDERABAD[2]. 3. E. VENKATAKRISHNA v. INDIAN OIL CORPORATION AND ANOTHER[3]. 4. HARBANSLAL SAHNIA AND ANOTHER v. INDIAN OIL CORPORATION LIMITED AND OTHERS [4]. 5. STATE OF H.P. AND OTHERS v. GUJARAT AMBUJA CEMENT LIMITED AND ANOTHER [5]. 6. SANJANA M. WIG (Ms) v. HINDUSTAN PETROLEUM CORPORATION LIMITED [6]. In AMRITSAR GAS SERVICE’s case cited (1 supra) the Supreme Court was dealing with the issues arising out of an Award passed by the Arbitrator appointed by the parties for resolution of the disputes that have cropped amongst themselves. Though the said case deals with a dealership agreement, similar to the one in the instant case, but however, it would be appropriate to notice the distinguishing feature, in principle, which has been pointed out by the Supreme Court itself in Paragraph No.11 of the Judgment in the following words: 11. We may at the outset mention that it is not necessary in the present case to go into the constitutional limitations of Article 14 of the Constitution to which the appellant-Corporation as an instrumentality of the State would be subject particularly in view of the recent decisions of the State would be subject particularly in view of the recent decisions of this Court in Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay [ (1989) 3 SCC 2930], Mahabir Auto Stores v. Indian Oil Corporation [(1990) 3 SCC 752 : JT (1990) 1 SC 363] and Shrilekha Vidyarthi v. State of U.P. [ (1991) 1 SCC 212 : JT (1990) 4 SC 211] . This is on account of the fact that the suit was based only on breach of contract and remedies flowing therefrom and it is on this basis alone that the arbitrator has given his award. Shri Salve is, therefore, right in contending that the further questions of public law based on Article 14 of the Constitution do not arise for decision in the present case and the matter must be decided strictly in the realm of private law rights governed by the general law relating to contracts with reference to the provisions of the Specific Relief Act providing for non-enforceability of certain types of contracts. It is, therefore, in this background that we proceed to consider and decide the contentions raised before us.” (emphasis supplied) In MIR SABIR ALI’s case cited (2 supra), a learned single Judge of this Court was dealing with the question of exercise of statutory powers culminating in a decision by the competent authority, in Paragraph No.7, as under: 7. The learned Counsel for the petitioner contends that when an authority exercises statutory powers culminating in a decision such decision should be supported by reasons. There cannot be any dispute with this contention. In fact this legal position is not seriously disputed by the learned Government Pleader for Home. However, what is submitted is that in view of the reasons now disclosed in the counter-affidavit, the petitioner should be directed to avail the alternative remedy by way of appeal. I do not agree. It is well-settled that when a statutory order is passed by a duly constituted statutory authority, the order should disclose the reasons for the conclusion. The Supreme Court in Commissioner of Police v. Gordhandas (AIR (39) 1952 SC 16), in similar context held: "We are clear that public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself." The above view in Gordhandas case (supra), was followed by a Constitution Bench of Supreme Court in Mohinder Singh v. Chief Election Commissioner (AIR 1978 SC 851). While referring to Gordhandas case (supra) his Lordship Justice Krishna Iyer held: "The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validates by additional grounds later brought out". In the instant case the dealership agreement does not enjoy any statutory back up. Further, the explanation was called for specifically drawing the attention of the petitioner that he is being proceeded against for the breach of an important term of the contract relating to the sale of requisite minimum quantities of stock. His reply has been adverted to in detail and it has received appropriate consideration. Hence, the principle set out in MIR SABIR ALI’s case cited (2 supra) is not applicable to the instant case. In E. VENKATAKRISHNA’s case cited (3 supra), once again, the Supreme Court was dealing with a matter arising out of an Award passed by an Arbitrator appointed by the parties to sort out the disputes that have arisen from out of a dealership agreement. In Paragraph Nos.4 and 5 of the judgment, this position has been made clear by the Supreme Court, in the following words: 4. The award was challenged by the respondent in proceedings under Section 30 of the Arbitration Act taken before a learned Single Judge of the Madras High Court. The learned Single Judge rejected the challenge. The respondent preferred an appeal and the Division Bench, in the judgment and order that is impugned be fore us, upheld the challenge. It said, "There is considerable force in the contention of the appellant that what is arbitrable under Clause 37 is only the dispute or difference in relation to the agreement. The question of restoration of distributorship would not arise under the agreement. Therefore, we have no hesitation in holding that the Arbitrator was in error and in fact had no jurisdiction to direct restoration of distributorship to the 1st respondent." 5. In our view, the Division Bench was right. All that the Arbitrator could do, if he found that the termination of the distributorship was unlawful, was to award damages, as any civil court would have done in a suit. In HARBANSLAL’s case cited (4 supra), the question that has fallen for consideration of the Supreme Court is whether a writ petition could have been entertained notwithstanding the dealership agreement containing an arbitration clause for resolution of the disputes arising therefrom. The principles on the said subject have been crisply chiseled out by Justice R.C. Lahoti (as he then was) in the following words: 7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the Fundamental Rights; (ii) where there is failure of principles of natural justice or, (iii) where the orders or proceedings are wholly without