IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.14806 of 2009 Date of decision:03.02.2010 Shri Bawa Lal Ji Filling Station, Fatehgarh Churian Road, Ghania Ke Banger, District Gurdaspur. ....Petitioner versus Indian Oil Corporation Limited and another ...Respondents CORAM: HON’BLE MR. JUSTICE K. KANNAN ---- Present: Mr. Amar Vivek, Advocate, with Mr. Nirdosh Kumar, Advocate, for the petitioner. Mr. Ashish Kapoor, Advocate, for the respondents-Caveators. ---- 1. Whether reporters of local papers may be allowed to see the judgment ? Yes. 2. To be referred to the reporters or not ? Yes. 3. Whether the judgment should be reported in the digest ? Yes. ---- K.Kannan, J. (Oral) 1. The petitioner seeks to quash the decision of the respondents cancelling the retail outlet dealership of petrol pump that had been issued to the petitioner under a contract between the parties through an agreement dated 29.02.2004. The period of lease enures for a period of 55 years. It is an admitted case that the property on which the petrol pump was situate has been held on lease by the petitioner from a person by name Suresh Kumar. The agreement stipulates a condition that the dealer shall not sell assign, sublet, mortgage, charge or part with or Civil Writ Petition No.14806 of 2009 - 2 - otherwise transfer the property on which the petrol pump is installed. Clauses 35 and 36 (a) are reproduced as under :- “35. The Dealer shall not sell assign, sublet, mortgage, charge or part with or otherwise transfer the premises or any part thereof his interest in the dealership or any right or interest or benefit conferred by this Agreement or grant any license in connection with the said premises and/or outfit or any part thereof to any person firm or company nor allow any other person, firm or company to use the premises or the outfit any part thereof except to the extent necessary under the terms of Agreement and specifically permitted in writing by the Corporation. 36(a) If the site be held by the Dealer as a Lessee or as a tenant, the Dealer shall during the currency of this Agreement and for a period of three months after the termination thereof, duly, faithfully and punctually observe and perform all the covenants, terms and conditions of the lease/tenancy to be observed and or performed by the Dealer and shall not surrender or allow to be terminate the lease/tenancy of the site or alter or agree to the alteration of the terms and conditions of the lease/tenancy without obtaining the written consent of the Corporation to such alteration which consent may be with held by the Corporation without assigning any reason therefore on which consent may be given on such terms as the Corporation may in its absolute discretion thinks fit.” 2. The petitioner, who had experienced some difficulties with his landlord in obtaining an extension of period of lease ultimately bargained for the purchase of the property itself from Suresh Kumar on 19.01.2006 and on the same day, he had transferred a portion of the property where the petrol pump is situate to Balwant Singh. On the same day, there was again a transaction of lease back from the transferee in respect of the property. 3. It could be noticed that it was literally a transaction of assignment of ownership of the land from Suresh Kumar to Balwant Singh in respect of the portion of the property where the petrol pump was situate. The purchase from Suresh Kumar was a larger extent and the Civil Writ Petition No.14806 of 2009 - 3 - transfer to Balwant Singh was only in respect of the portion that where the petrol pump was situate while a smaller piece of land was retained by the petitioner herself. 4. The cancellation of the dealership was made relying on the terms of Clauses 35 and 36 which required that if a property was held on lease, the dealer shall not surrender or allow to be terminable the lease/tenancy of the site or alter or agree to the alteration of the terms and conditions of the lease/tenancy without obtaining written consent of the Corporation to such alteration, which consent might be withheld by the Corporation without assigning any reason therefor. The clause is evidently incorporated to ensure that a dealer does not transfer the dealership which is personal to him or to do anything upon the property which may imperil the continuance of the dealership or induct a new person with whom the Corporation is not a privy. The object of the Clauses 35 and 36 are not difficult to seek that it is intended to secure a complete control for the Corporation that the integrity of a contract with the dealer is not in any way jeopardized. 5. The grievance of the petitioner is that the cancellation which was sought to be done through the impugned proceedings was made without affording to the petitioner sufficient opportunity to explain the whole transaction and that there was no mala fides in the action and the transfer was merely to assure to himself and to the Corporation a security of tenure of lease in respect of the land and his own possession of the property is not lost to an unwilling landlord, who was not interested in granting extension of lease. As regards the bona fides of the transaction, Civil Writ Petition No.14806 of 2009 - 4 - it was contended that the petitioner had also produced the bank account in response to the show cause notice explaining as to how the operations at the petrol pump were still carried on by her and the entire flow of funds and remittance were being made through the same banker. Yet another instance which the petitioner was trying to show was the fact that the Corporation itself had availed of a contract from the petitioner for transporting some petroleum products through a tanker which she owned. The contention was, therefore, that the cancellation of lease was not justified and it was arbitrary, being violative of the fundamental right to carry on trade guaranteed under the Indian Constitution. The objection also was that the cancellation was sought to be made without appropriate enquiry flouting the principles of natural justice and hence, she was seeking for extraordinary remedy though Article 226 of the Constitution. 6. The learned counsel appearing for the respondents would state at the outset that the writ petition itself would not have the remedies since the terms of the Contract provided for arbitral clause that reserved to an Arbitrator to adjudicate on any dispute between the parties. The arbitral forum was bound to assure a more efficacious remedy for the petitioner and the resort to a writ petition, was therefore not justified. It is the further contention of the respondents that there was admittedly a clear breach of the term of the agreement in that a portion of the property which the petitioner purchased from the original owner Suresh Kumar had been sold to Balwant Singh and such a transaction was not informed previously to the Corporation and no sanction had been obtained for such Civil Writ Petition No.14806 of 2009 - 5 - a sale. For any violation in terms of the contract, the respondents were entitled to terminate the agency and therefore, the petitioner is not entitled to obtain any relief before this Court. The learned counsel also relied on a decision rendered by me in M/s Indian Oil Corporation Limited Versus M/s Rajpura Gas House and another in FAO No.3815 of 2009, dated 18.08.2009 where I had upheld the decision of the Arbitrator awarding damages to the dealer complaining of illegal termination of contract of agency. 7. On the issue of alternative forum, the learned counsel appearing for the petitioner refers to the decision of the Hon’ble Supreme Court in Mrs. Sanjana M. Vig. Versus Hindustan Petro Corporation Limited-2005(8) SCC 242 that dealt with the situation of an intervention through the writ petition for a termination of contract done under a similar situation when a dealer of petrol pump had filed a writ petition, without resorting to arbitral process. The Hon’ble Supreme Court while considering the issue relating to the maintainability of the writ petition held as follows: “12. The principal question which arises for consideration is as to whether a discretionary jurisdiction would be refused to be exercised solely on the ground of existence of an alternative remedy which is more efficacious. Ordinarily, when a dispute between the parties requires adjudication of disputed question of facts wherefor the parties are required to lead evidence both oral and documentary which can be determined by a domestic forum chosen by the parties, the Court may not entertain a writ application. (See M/s Titagarh Paper Mills Ltd. Versus Orissa State Electricity Board and another (1975) 2 SCC 436 and M/s Bisra Stone Lime Company Limited etc. Versus Orissa State Electricity Board and another-AIR 1976 SC 127. However, access to justice by way of public law remedy would not be denied when a lis involves public law character and when the forum chosen by the parties Civil Writ Petition No.14806 of 2009 - 6 - would not be in a position to grant appropriate relief. 17. It may be true that in a given case when an action of the party is de'hors the terms and conditions contained in an agreement as also beyond the scope and ambit of domestic forum created therefor, the writ petition may be held to be maintainable; but indisputably therefor such a case has to be made out. It may also be true, as has been held by this Court in Amritsar Gas Service (supra) and E.Venkatakrishna (supra), that the arbitrator may not have the requisite jurisdiction to direct restoration of distributorship having regard to the provisions contained in Section 14 of the Specific Relief Act, 1963; but while entertaining a writ petition even in such a case, the Court may not loose sight of the fact that if a serious disputed question of fact is involved arising out of a contract qua contract, ordinarily a writ petition would not be entertained. A writ petition, however, will be entertained when it involves a public law character or involves a question arising out of public law functions on the part of the respondent” This decision relies on an earlier ruling of the Hon’ble Supreme Court in Harbanslal Sahnia and another Versus Indian Oil Corporation Limited and others-AIR 2003(2) SCC 107, when the Hon’ble Supreme Court was referring to its own earlier ruling in Whirlpool Corporation Versus Registrar of Trade Marks, Mumbai and others-1999(1) RCR (Civil) 220 elating to the three circumstances, when even in the presence of an alternative remedy a public law remedy through the writ petition would still be maintained. The three circumstances as referred in Whirlpool Corporation and which were reproduced by the Hon’ble Supreme Court obtains through its observations in para 7 which is as under :- “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 Civil Writ Petition No.14806 of 2009 - 7 - 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 lease 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 jurisdiction or the vires of an Act and is challenged. (See Whirlpool Corporation Versus Registrar of Trade Marks, Mumbai and others- 1999(1) RCR (Civil) 220: (1998) 8 SCC 11).The present case attracts applicability of first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings.” 8. The petitioner’s contention is that the circumstances availing of a remedy through writ petition in spite of the arbitral clauses obtains in this case by the fact that in the face with an action for cancellation of a licence, there could have been no scope under the Arbitration Act to secure an immediate interim relief for continuation of the business. The Arbitration Act provides for a remedy under Section 9 for interim order for protection of the property but it would not still avail to her a relief for continuation of business. The Arbitrator’s power to allow for continuation of the business through an interim order in the proceeding before the Arbitrator could not have been effectively exercised after the cancellation takes effect, if an adjudication were to be undertaken by the Arbitrator. The learned counsel appearing for the Corporation still would distinguish the decisions of the Hon’ble Supreme Court and refers to the very same judgment in Mrs. Sanjana M. Vig. where the Hon’ble Supreme Court cautioned in paragraph 17 that even while entertaining a writ petition, the Court may not lose sight of the fact Civil Writ Petition No.14806 of 2009 - 8 - that if a serious disputed question of facts is involved arising out of contract qua contract, ordinarily a writ petition would not be entertained. 9. In this case if the cancellation had been on the basis that the Corporation had genuine doubts about the bona fides of the sale or that the purchase of Balwant Singh had himself obtained any interest with the dealership itself or that the sale and the lease back were mere make-believe transactions though that the dealer continued his operation while in fact the business had gone to the hands of Balwant Singh, then they would certainly be instances where serious disputed questions of fact would have required a different type of appraisal in a different forum. In this case, it must be noticed that the cancellation was on a single aspect of the transaction of sale coming through without previous sanction from the Corporation. I have already set out the raison d’etre for a clause such as 35 and 36 that should have relevance for preventing any transaction by the Corporation that would have the effect of creating a transfer of interest to a third party to which the Corporation was not a privy. A grant of dealership is a personal contract which could not be transferred. In this case, the dealership was not transferred. It is the land held on lease by the tenant that was purchased by the lessee himself and transferred back to yet another person with whom he obtained a fresh transaction on lease. It was really in the nature of a third party owner of a land transferring by sale to yet another third party when the lessee continues to be the same person. Only that in this case, the transfer has not been affected from Suresh Kumar to Balwant Singh directly. It has come from Suresh Kumar to the petitioner or on the same day it has been Civil Writ Petition No.14806 of 2009 - 9 - sold to Balwant Singh. The proximity of these transactions would lend credibility to the contention of the petitioner that the previous landlord Suresh Kumar was not interested in granting an extension of lease and it was only to ensure a continuity of lease without any obstruction that the transaction of purchases was made and immediately a sale was done to Balwant Singh with a right of lease back secured from him. In the context in which the whole situation has arisen, I have no doubt in my mind that the cancellation which is made of the dealership was unjust and the Corporation was going more by a strict terms of the contract with blinkers on, blinded as it were, to actualities than seeing through, to the situation that it created no violence to the spirit of the contract between the parties. 10. Even in the judgment delivered by me in M/s Indian Oil Corporation Limited case in FAO No.3815 of 2009 relied on by the respondent, I had not ruled out a public law remedy in such a situation. The above case rendered to a decision of an arbitral Tribunal that had already rendered a decision and the extent of judicial review. I had observed in that case, “The reliefs which were granted in exercise of jurisdiction under Article 136 or under Article 226, when a direct challenge is made in the writ petition is wholly different from when a party seeks for enforcement of a particular contract which is terminated, before a Civil Court or arbitrator exercising his powers akin to Civil Court.......” The said decision is not in any way inconsistent to the present dispensation; on the other hand, it addressed a different situation. Civil Writ Petition No.14806 of 2009 - 10 - 11. In the nature of things, although not specifically pleaded, I direct that the respondents approve the sale that has come about from Suresh Kumar to the petitioner and the sale of a portion of the property to Balwant Singh that has taken place specifically with the lease back arrangement from Balwant Singh. I am informed that all the necessary documents have been furnished already to the respondents and they shall act on the same. 12. The writ petition is allowed on the above terms and the impugned letter of cancellation is quashed. (K.KANNAN) JUDGE 03.02.2010. sanjeev