WW»; 3mm Qagw IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR (c.G.) w.P. (C) No. ?5/£/2009 PETITIOE NR: Ayush Petrl ump o P Th ror . hroug popriet Dr. M.K Agrawal, So Late Shri M.L. Agwal, about 41 ars R/ Agrawal Mical Stes, Bus Stand, Charoda, Dist Durg (C..) 1. Hindustan Petroleum Corporation Limited, Throu the Senior Regional Maager, Madina Manzil, 2n Floor, Medicl College Road, Raipur C.G.) Manger pot, Hindstan Petroleum Corporatio mited Mandirhasud Rar C.G.) Union of ndia Through the Scretary, Ministr of Petroleum and Natural Gas, Government of India, New Delhi WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA FOR ISSUANCE OF THE WRIT / ra Aged ye, o ed or G VERSUS gh n d a ( a De u a, ipu ( n Li, I, e y 9E CERTIORARI. MANDAMUS AND FOR OTHE SUITABLE WRITS AND DIRECTIONS:- R ‘ AFR \C\([A__g V ._ HIGH COURT OF CHHATTISGARH AT BILASPUR Writ Petition gCLNO. 7518 01.2009 Ayush Petrol Pump. J_’J_£T_I'I“IONER VERSUS BESPONDENTS Hindustan Petroleum Carporation Limited & Others. 4A Post for pronouncement of order on It} day of September, 2010. ‘ a Sdl- .. ‘ : Satish K. Agnihotrl 3 ' Judge V HIGH COURT OF CHHATTISGARH AT BILASPUR WRIT PETITION (C) N0. 75 18 of 2009 P BTITIONER Ayush Petrol Pump. VERSUS Hindustan Petroleum Corporation Limited & Others. R F SPONDENTS _\],\/‘l_{‘ll PETITION UNDER ARTICLE 226/227 OF THF. CONSTITI ITION OF INDIA SB: Hon’ble Shri Satish K. Agnihotri, J. Present: Shri Sanjay K. Agrawal with Shri J.Pa1i, Advocates for the petitioner. Shri P.S.Koshy with Shri N.N.Roy, Advocates for the respondent No. 1 and 2. Shri S.S.Rajput, Advocate for the respondent No. 3. ORDER (Delivered on ../.Lg..H‘day of September, 2010) Challenge in this petition is to the order dated 21.122009 (Annexure P/l) whereby the dealership of the petitioner—firm has been terminated on the ground that the petitioner has committed breach of clause 42, 44, 55(G) alongwith clause 10, 11, 12, 43 and 55(K). It is further prayed that consequently. the respondent N0. 1 and 2 be directed to restore the suspended supply of Motor Spirit (for short ‘the MS.) and High Speed Diesel (for short ‘the H.S.D. ’). 2. The brief facts, in nutshell, as projected by the petitioner is that the proprietor namely Dr. Mukesh Kurnar Agrawal (herczinajier referred to as ‘the proprietor’), of the petioner—film amely ti n Ayush Petrol Pump, is also a proprietor of a nursing home namely, Agrawal Nursing Home at Bhilai, and operates through other qualified staff for charity purposes. According to the petitioner, the role of proprietor in the said nursing home is only ofa care taker for smooth functioning of the nursing home and no income is derived from the said nursing home. The petitioner— firm was appointed as dealer ofthe respondent No. l and 2-Corporation for sale of petroleum products including MS and HSD, W.e.f. 23.03.2005 (Annexure P/2). The petitioner was nder an obligation to pay full price of delivery to be made on the supplies received at the depot effecting the sale of the products. Accordingly, the petitioner left several cheque books containing several signed cheque leaves with the depot of the Corporation in good faith anticipating that the Corporation authorities would flll in the correct amounts and dates on such cheque leaves against supplies to be made to the petitioner. On account of ill health of the father of the proprietor, the petitioner could not reconcile the account and his father died on 30.07.2009. The petitioner received a notice on 01.08.2009 (Annexure P/5) for payment of the amount to the tune of Rs. 26,33,03394 immediately, followed by another notice dated 07.08.2009 (Annexure P/6) to pay a sum of Rs. 15,58,49892 towards the principal amount and Rs. 30,000/— towards balance interest for the dishonored cheques. The petitioner immediately deposited a sum of Rs. 27,81,48745 during the period from u 03.08.2009 to 05.08.009. The petitioner submitted its reply 0n 25.08.2009 (Annexure P/7) stating the reasons for non- rcconciling the account, however, made it clear that he had already submitted demand drafts against the returned cheques Alter receipt of the entire amount alongwith interest, the respondent No. 1 and 2/C0rporation decided to issue show cause notice to the petitioner on 25.08.2009 (Annexure P/8) for, showing cause asto why necessary action may not be taken against the petitioner as deemed fit in terms of clauses 10, i l, l2. 42, 43, 55(g) and 55(k) of the Dealership Agreement dated 24.02.2005. The time to submit reply was 7 days from the date of receipt of the notice. The petitioner replied to the said notice on 27.8.2009 (Annexure P/9). Thereafter; the impugned order 21.12.2009 (Annexure P/l) was passed. Thus, this petition. Shri Sanjay K. Agrawal, learned counsel appearing for the petitioner with Shri Jitendra Pali, would submit that the petitioner had deposited the entire amount alongwith interest before issuance of the show cause notice for termination of the petitioner’s dealership stating, inter—aha, that the dishonor ol‘ cheques had been taking place for a long time and the petitioner continued to lift the product from HPCL depot without taking corrective measures. Shri Agrawal would further submit that the account could not be reconciled due to prolonged illness of the father of the proprietor of the petitioner-finn, as well as for \ ‘ y. the reason that the petitioner vwas never informed before 01.08.2009. Shri Agrawal would next submit that clause 55(g) of the dealership agreement clearly provides that if the dealer, for any reason makes default to make payment to the Corporation in full or his outstanding as appearing in the corporation books of account beyond 4 days of demand by the corporation, the corporation shall be at liberty to terminate the agreement. It is further provided that if there is any breach of any of the covenants and stipulation contained in the agreement, and fail to remedy such breach within four days ol‘ the receipt of a written notice from the corporation in that regard, the dealership would be terminated. In the case on hand, the respondent N0. l and 2/Corporat0in has not given any such notice to remedy any alleged breach of the clause of agreement within the stipulated period and even the show causc notice which was given after deposit of the entire amount also, does not disclose that if there was any breach, the dealer was under obligation to remedy the same within a period of four days of the receipt of written notice, from :the Corporation in that regard. Thus, the act of the respondent N0. 1 and 2/Corporation is contrary to the provisions of the agreement, unreasonable, arbitrary and discriminatory. In the instant case, no such notice of four days as provided in section 55—A of the dealership agreement, was ever issued to the petitioner for remedying the alleged breach of clauses 10, ll, 12, 42, 43, 555(J) and 55(K) Shri Agrawal, in suppor’t of his contention would rely on Hindustan Petroleum Corporation Limited & Others v. Super Highway Services & another], handed down by the Supreme Court and a decision of this Court in M/s. Saz' Service Station v, Indian 0i] Corporation & Others2 and the latest decision ol' this Court in Malmmaya Service Centre v. Indian Oil Corporation Limited & Othersj. Shri Agrawal would further contend that no cause of action has arisen under the provisions of Negotiable Instrument Act, 1881 ‘(for short ‘the act, 1881 ’) as section 138 of the Act, prescribe that to constitute an offence, six ingredients are required to be fulfilled to say that person who had drawn the cheques can be deemed to, have committed an offence of the dishonor ol' cheques Within the meaning of section 138 ofthe Act, 188 l. No notice or demand was issued for the payment of dishonor ol‘ cheques providing 15 days time as contemplated under section 138 of the Act, 1881 and as such, the same is not available t the respondent N0. l and 2/Corporation: Per contra, Shri Koshy, learned counsel appearing for the respondent No, l and-’Z/Corporation would submit that the impugned order was passed on the ground of violation ol‘ clauses clause 42, 44, 55(G) along with clause 10, 11, 12, 43 and 55(K) of the dealership agreement dated 24.02.2005 éL 'izuim 3 sec 32i f writ ‘) Nu. 4523 ofzoos, decided on 20‘102008. ‘ J wrini’inuo. [668 of2009§ decided on 09.09.2010 > s o (Annexure P/3). Shri Koshy would further submits that this petition filed under Article 226 of the Constitution of India, is to enforce a civil liability arisin out of breach of contract to g ay the amount due to the spndent-Corporation and s such the same is not maintainable, on the ground of avaibility of ttive eme i terms of rbiation agreeme as per clse 66 of te dealership agreement. The suppes wer stoped by the responent No. l and 2/Corpration, when wa found that there were financial irregularities n the part f s o o the petitioner by not payig te dues. Thereafter, payin back n h g the money does not absolve th petitioner from th wron e e g committed by and the me amounts to violation of the dealership agreement. There is no public element iolved in ts case. It is a matter of breach contract Which c be ‘ it vi t An a agated before the Cil Cour of competent jurisdiction. d hoc dealer has been aointed in place of the petitioner. It i a case where the payment of post—dated cees hav een toped by the petitioner. The petitioner was a habitual delau k ot lter in maing payment as the cheques were n shonored onc but severa casions. The peitione a I ormed about te dishonor of cheques through telehon communication. There is no mandatory requirement of isnce e show cause notice before susensio of sales an suplies of MS/HSD as pe the existing norms. Suspens due to the outcome of non—transfer of’funds to the respode p reo a , la an alema rdy n atr nt au h li e p d o it it sa nv hi of an pp s hqu e b sp di e. on l oc tr ws inf h pic sua of th pn d p r ion was nnt No. 1 and 2/Corporation. Shri Koshy would further submit that the petitioner has paid the balance amount after a‘much delay of demand. Accordingly, after ensuring full payment, the Show cause notice was issued. Having considered the rival submissions made by learned counsel for the parties, the facts involved in the case on hand are indisputable. There is no dispute that the petitioner failed ln honoring the cheques issued by him for supply ot‘MS and liSD and failed to make regular payment for supply of MS and HSD. 'l‘hereafter, a notice was issued on 01.08.2009 and subsequently, the entire amount tie. the principal sum with interest, as demanded, was paid before 25.08.2009. Thus, there is no dispute involved in the instant writ petition. The relevant clauses of the dealership agreement viz. 10, ll, l2, 42, 43, 44, and clause 55 reads as under: 10'. The corporation will deliver its said products to the dealer at the rates therefor ruling on the date of delivery, the corporation will make delivery of products to the dealer against payment in cash or by demand draft. The corporation may, however, as its sole discretion agree to give such credit/cheque facilities as it deems fit to the dealer from time to time and for such period or/periods as the corporation considers appropriate and may cancel or vary the same at any time without assigning any reason therefor and without giving any advance notice. In the event that the corporation shall agree to extend any such credit facility, the dealer shall settle all bills punctually within the period of credit allowed without any deduction whatsoever, and without claiming to set off against the amount of such bills any amount admittedly due or alleged to be due by the corporation to the dealer. In the event of the amount of any bill or part thereof preferred by the corporation upon the p dealer remaining unpaid fora period of four days. The corporation shall be at liberty to refilse supply any further product to the dealer and also to forthwith treat this agreement as being repudiated by the dealer. Sales tax, surcharges and other levies or Charges, applicable from time to time, shall be extra, should there be any change in the incidence, rates, charge or levy of such taxes, surcharges and other levies or charges, on account of any change in the basis of levy 0r in the interpretation of law for any reason whatsoever, all such taxes, surcharges, levies or charges shall be payable by the dealer to the corporation in accordance with such changes from the date of such a change is in force and/or made effective on all sales of the products made hereunder, notwithstanding that such sales were made before the date of such change. In the event of the corporation has to supply the products to a dealer in another State, the corporation shall dispatch the products to the dealer with the corporation as the consignor and the dealer as consignee. The dealer shall issue necessary declarations as prescribed under the central sales tax act and the rules made thereunder to enable the corporation to charge concessional rate of tax in respect of such sales. ll. Notwithstanding that credit may be given for the payment of the price of the products. The corporation shall be entitled, without assigning any reason thereof, to resume and keep possession of the goods until payment. l2. In addition to any right of lien to which the corporation may by law or under this agreement be entitled, the corporation shall be entitled to have a first charge or lien on all goods of the dealer for the unpaid price of any goods sold and delivered to the dealer by the corporation under this agreement; 42. The dealer undertakes faithfully and promptly to carry out, observe and perform all directions or rules given or made from time to time by the corporation for the proper carrying on of the dealership of the corporation. The dealer shall scrupulously observe and comply with all laws, rules regulations and requisitions of the Central/State Govemment and ot‘all authorities appointed by them by either of them including in particular the Chief Controller of Explosives, Government of India, and/or Municipal and/0r, any other local authity with regar t0 t sorage and sale of such petroleum products. . The ler shall indemnify nd save harmles e corporation rom all losses; damages, clas, sus or actions which my ise out ofresult from any iury to an person or property or from oaions of ny sttuto enactments, rules and reguios or other wr1ten orders 0 other laws or caused by or resulin, from no-observance by the dealer of the provisions of this greement. al rnt o t m h ua th l (if ne er t r y mem of pet t in agm e il d s a er [m 44. It shl be a paamou conditin of he agreement that the dealer hiself .(if e be an individl) or bo partners of the dealer ‘irm the dealer is a partnership finn consisting of two partners only) by the majority of the partrs of the deal 'l'irm (if the dealer is a firm consisting of more han two partners) o the majorit of the bers the dealer co-operative society (if the‘dealer is a co-oraive society) as he case may be shall take active part the maneent and running of th reta outlet an hall personally supervise the same and shall not under any circumstances do so through ny oth person, ‘ir or body. 55. Ntwithstandg anytng to the contrary herein contained, the corporatn shal be at libety to terminate this agreement orthwith upon or at any ime after the happeng of any of the following, amely; (A) I the dealer shal commit a breach of any o t covenas and stipulation contaid i the agreement, and fa to emed such breach wiin four days e receipt of a ritten noc rom te corporation in that regard. (B ) Upon 1) The death or a aJurcaion as insolvent the dealer, fhe be an 1n1v1dua (ii) The dissolution of the ptnership of the dealer’s firm or th death of adjudication as insolvent of partner of the fir if the dealr be a firm; 111) The lluldaio whether voluntary or otherse or the passg of a eeci resolulon of the wng up, 1f the dealer be a company or c pera1ve socty (C) If any attachment is levied and continued to b levied f a period of seven day upon the effects of te dealer any inivua partner for the time ei of the dealer’s firm or any ember of the dealer co— operative society. i or d he t 43 dea a sn th f im it a ar ni y Vllt a ary latn t 1 tg n a oin hi io l r f t ni n f l l‘ he nt ne n il ry th ol" th w tie f h ( ddt of 1 dl ar e any m e ( qtn rw m n fftve t mth o ot 1c e or s h or didl bng m (D) If the dealer of any partner in the dealer’s firm 0r any member of the co-operative society appointed as dealer hereunder shall be convicted of a criminal offence. ‘ (E) If a receiver shall be appointed of any properly or assets 0f the dealer 0r of any partner in the dealer’s firm or of any. member of the dealer co~operative society. ' (F) The licence issued to the dealer by the relevant authorities for the storage of petroleum and other products supplied by the corporation is cancelled or revoked. ‘ (G) If the dealer shall for any reason make default in payment to the corporation in full or his outstanding as appearing in corporation books of account beyond 4 days of demand by the corporation. (H) If the dealer does not adhere to the instructions issued from time to time by the corporation in connection with safe practices to be followed by him in the supply/storage of the corporation’s products or otherwise. (I) If the dealer shall contaminate or tamper with the quality of any of the products, supplied by the corporation. (J) Ifthe dealer shall sell the product, supplied by the corporation at prices higher than those fixed by the corporation/statutory authority. (K) If the dealer shall either by himself or by his servants or agents commit or suffer to be committed any act which, in the opinion of the Chief/Senior Regional Manager/Regional Manager of the Corporation for the time being in whose decision shall be final, is prejudicial to the interest or good name of the corporation or its products the Chief/Senior Regional Manger/Regional Manager shall not be bound to give reason for such decision! (L) If any information given by the dealer in his application for appointment as a dealer shall be found to be untrue or incorrect in any material respect. The corporation’s right to terminate this agreement under the termsgor this clause shall be without prejudice to any of its other rights and remedies against the dealer. In the evenf of the corporation terminating this agreement under the provisions of this clause, it shall not be liable to pay for any loss or compensation in respect of such termination provided that the supply of any‘ petroleum products by the corporation to the dealer, pending expiry of any notice of termination or after any, act, contravention or omission by the dealer entitling the corporation to terminate this agreement shall have become known to the corporation, shall not in any way prejudice or affect the right of the corporation to revoke and/or enforce the termination of this agreement and the licence granted hereunder. In the show cause notice dated 25.08.2009 (Annexure P/8) the respondent No. l and 2/Corporati0n has stated the irregularities on the part of the petitioner by violating the terms and conditions of the dealership agreement, which reads as under: “While you are expected to carry out the business to the satisfaction ofthe Corporation you have not been doing so, far the past several months. We were quite surprised to note that the dishonour of your cheques have taken place for a quite long period and neither you have intimated Corporation nor you have taken any corrective action at ' your end. Above all, you continued to lift product from Mandir Hasaud Depot without paying for earlier supplies and without taking corrective action. It is regretted to note that you have never brought to our knowledge of your own about above series of dishonor of cheques. You have not taken any corrective action ofyour own and to pay for the outstanding amount. You kept lifting product from our depots without bothering to pay for the earlier supplies. Even'though local cheque facility was extended to you for depositing the same at Bhilai COD, you have deliberately given the outstation cheques at Mandir Hasaud while the same facility was never extended to you.” 0. The petitioner, within, a period of two days, responded to the t said notice explaining his conduct. The same reads as under: “Sir as advised we have cleared the MS/HSD and Lubes account as of date and there are no dues pending from our side. In addition above we have also deposited additional amount of Rs. l,25,000/— in our MS/HSD account. I also beg to state that the amount of Rs. 807l008.07, including interest was deposited by us as soon corporation advised us regarding dishonoredinstruments I would like to state that I am sole proprietor of M/s. Ayush Petrol SN ix. .‘ .. (b 7 U 10 ii I3. H lil H H) Pump and from its inception the sale of MS/HSD and lubes are on continued to grow day by day. Due to my fathers prolonged illness, I am not able to reconcile my Bank Account and I am totally unaware of any dishonoring of instruments presented to HPCL from M/s. Ayush Petrol Pump till date the corporation informed about above matter. Sir we did not have any intent of not honoring payment which was due from us to HPCL, and we will be always loyal to HPCL in future also and it can also be reflected from the fact that we had immediately paid all outstanding amount including the interest to the corporation as soon it was advised by the HPCL and immediately herealter we are reconciling our all the accounts with HPCL and without our Bankers and all the due care is taken that no such incident will occur in future. The details of the outstanding payment made to the HPCL We have also received letter from corporation regarding receiving of all the outstanding payment along with is given below: CHQ CHQ DATE AMOUNT DD No, DD DATE AMOUNT“ No o I ‘573 8 26/08/2008 445447.42 739870 05/08/09 445447.42 0 t 5741 27/08/2008 460216.25 739871 05/08/09 4602 1 6.25 61 5742 30/08/2008 491 1 62.76 739877 08/08/09 491 162T7‘6‘” 6 1 5 /43 01/09/2008 445447.42 739869 05/08/09 44"" " 615744 02/09/2008 610268.68 739872 08/08/09 "'""""6'“10269.00'"' 4 1 9552 04/05/2009 393437.50 739851 30/07/09 39343 7.5 4 19555 05/05/2009 414295.95 739852 30/07/09 41 4295.95 4 19563 16/05/2009 42 1 248.77 739853 30/07/09 42 1 248777" 419564 18/05/2009 421248.77 739854 30/07/09 421248.77 ' 4 19569 20/05/2009 107590.00 739855 31/07/09 107596” ‘ 4 1 9592 22/06/2009 403108.95 739856 30/07/09 403 1 08.95”“ 421006 04/07/2009 457067.92 739889 17/08/09 457068.00 ’ 421015 15/07/2009 484268.11 739868 04/08/09 484268.11" 421016 17/07/2009 484268.11 739859 31/07/09 48426871“ ' 421019 20/07/2009 946108.25 739866 04/08/09 ‘ 946i‘6‘8i'2‘5 :12 1 025 28/07/2009 484268.11 739862 3 1 /07/09 484480. 1 6 739867 04/08/09 115451 17/08/09 TOTAL