* 1 * IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPLICATION NO. 5159 OF 2008 IN FIRST APPEAL NO. 51 OF 2008 IN SHORT CAUSES SUIT NO. 958 OF 1998 1. Fort Motor Equipment Co.,& Ors. ...Appellants (Orig.Plffs.) V/s. I.B.P.Co.Ltd & anr. ....Respondents (Orig.Defnds) ======== Mr.A.Y.Sakhare, Senior Counsel i/by.Mr.P.M.Havnur, adv.for applicants. Mr.Zal Andhyarujina with Mr.Raj Ranehmatia i/by.Udwadia and Udeshi, adv.for respondents. CORAM: SMT.R.P.SONDURBALDOTA, J. DATED: 4TH FEBRUARY, 2009. P.C. : 1. This Civil Application is taken out by the applicants for interim reliefs pending the hearing of the First Appeal. The application is opposed by the respondents. 2. Applicant no.1 is a partnership firm with applicants no.2 to 4 as its partners, carrying on business of * 2 * selling/supplying in retail, petroleum products, oil, diesel and service station at Cumbala Hill. Applicant no.1 is a licensed dealer of respondent no.1, a government of India Undertaking which owns the petrol pump and service station at Cumbala Hill, Mumbai. It had entered into dealership agreement dated 12th July 1996 with applicant no.1 and was granted license commencing from 1st April, 1996. The license came to be terminated by respondent no.1 vide its notice dated 9th December 1998. The applicants challenged termination of the license and dealership by filing Long Cause Suit No. 958 of 1998 in the Bombay City Civil and Sessions Court at Bombay. The suit was dismissed by the judgment and order dated 15th December, 2007 which judgment is challenged in the instant First Appeal. 3. The interim relief sought by the applicants in the present civil application is as follows :- “a) That pending the hearing and final disposal of the First Appeal, that the respondent company be directed by a mandatory order and direction of the Hon'ble Court from obstructing the appellants in carrying on their business of dealership outlet, retail petrol pump at Cumballa Hill, Mumbai in any manner whatsoever including preventing the appellants from carrying on business and/or sealing the pump and/or interfering in manner whatsoever with the supply of petrol, diesel to the outlet continuously as was being done in the past or in any other manner whatsoever ; . This interim relief was enjoyed by the applicants pending the suit and since admission of the appeal as ad- * 3 * interim order till date. 4. The alleged incident that led to termination of the agreement and license is as follows :- . On the night of 4th/5th February 1998 the Chief Divisional Manager, Mumbai Division of the respondents received a call from the police about illegal activities taking place at Cumballa Hill service station. They asked for the assistance of officers of the respondents to conduct an investigation. Accordingly, officers Mr.C.U.Kale and Mr.Abhijit Gupta visited the outlet at Cumballa Hill to assist police and officers from Food and Rationing Department. On visiting the outlet, they found that a tanker lorry bearing registration No.MH-04-P-516 carrying unspecified products without valid documents was placed in a position of decapitation with the hose pipe connected to the delivery manifold of the tank lorry and the decapitation pipe of the underground MS tank. On inspection of the petrol pump, further irregularities were found. The officers found that the totalizer provided by the respondents to the applicants was missing. The record of density register was not properly maintained. The dispensing units were delivering short measure and stocks of unleaded motor spirit were found in excess by 183 lts beyond the permissible limit. The other irregularities were (i)MS adulteration poster not displayed, (ii) the complaint book * 4 * not maintained, (iii) message regarding zeroing of pumpmeter not displayed and iv) Explosive rules not displayed. A report of the inspection was prepared by the officers of the respondents. It was countersigned by the constituted attorney of the applicants, the police officers and the officers from the Food and Rationing Department. 5. The applicants do not dispute existence of the tanker lorry with its hose pipe connected to the hose pipe of the underground tank. They however contend by amending the plaint that the tanker lorry was brought by some persons with ultimate motive to malign the applicants and that the entire matter was a conspiracy between the officers of the respondents and some third parties. They also do not dispute the presence of 183 lts of motor spirit in excess of permissible limits, not keeping the density record upto date. As regards the missing totalizer, they allege that the respondents had not provided it to them. 6. The material covenants that the applicants undertook to perform under Clause-9 of the dealership agreement read as follows : “9) The Licensee/s hereby covenant and agree with the company as follows : a) To promote the sales of the products marketed by the company to the satisfaction of the company and to achieve such sales targets as may be from time to time by the * 5 * company. c) To promote motor spirit or H.S.D. From the company at the rates fixed by the company, as applicable at the time of delivery and if in bulk, in quantities at a time of product (no being in excess of the licensed capacity of the underground tanks) as required by the company to allow the economical deliveries being made from the supplying vehicle. No motor spirit or H.S.D. So ordered shall be delivered into cans or into any receptacle other than the storage tanks forming part of the outfit. e) To take every reasonable precaution against contamination of the products supplied by the company by water, dirt or other things injurious to the their quality and not in any way directly or indirectly alter the company's standard quality of products as delivered. The company shall have the right to exercise at their discretion quality control measures for products marked by the company. f) To be responsible for all motor spirit or H.S.D. Or other petroleum products delivered by the company from the time of delivery thereof into the storage tanks at the outfit or otherwise and to pay for all supplies ordered by the Licensee/s prior to the delivery thereof unless otherwise agreed. g) To undertake that they and their servants and agents will observe and perform the provisions of the Petroleum Act, 1934 or any statutory re-enactment or modification thereof for the time being in force and all rules, regulations made thereunder and all other Government or Municipal, local or such other acts, laws, regulations and bye laws as may be in force from time to time. 7. Clause (I) requires the applicants to sell motor spirit or HSD supplied by the company at the rates fixed by the company from time to time. It further provides that in the event of the company being satisfied that the licensees have sold motor spirit or HSD at the rates other than those * 6 * fixed by the company or if otherwise committed breach of the terms of the license,t he company shall have the right forthwith to stop all supplies to the licensees. Further sub- Clause (S) of Clause (9) also empowers the respondents to stop the supplies for breach of any of the covenants. It reads as follows : “s) The company shall be at liberty upon a breach by the Licensee/s to any covenant in this license forthwith to stop all supplies to the licensee/s for such period as the company may think fit and such right of stoppage of supplies shall be without prejudice to any other right or remedy of the company under this license. For the purpose of this sub-clause, the manager of the company for the time being in Mumbai shall be the sole judge as to whether a breach of any covenant or agreement has been committed by the licensee/s.” 8. Clause (19) of the license agreement empowers the respondents to terminate the dealership agreement. Sub- clauses of Clause 19 which are relevant for the present purposes read as follows : “19. Not withstanding anything to the contrary hereinabove contained the company shall be at liberty to terminate and to revoke the license forthwith upon or at any time after the happening of any of the events following : f) If the licensee/s shall be guilty of a breach of any of the covenants and stipulations on their part contain in clause 9 hereof. g) If the licensee/s shall commit or suffer to be committed an act which in the opinion of the manager of the company for the time being in Mumbai whose decision shall be final is prejudicial to the interest or good name of the company or its products.” * 7 * 9. From the facts narrated above, which are undisputed it is seen that there are serious irregularities and breaches of the dealership agreement committed by the applicants. These have been established during the trial and it has been held that termination of the dealership agreement by the respondent is proper. This is the background against which the present application for interim reliefs to allow the applicants to continue to function as a dealer and licensee of the respondent, is required to be considered. 10. Mr.Sakhare, learned counsel for the applicants, submits that, the applicants have been enjoying the interim reliefs over a long period of time right from the inception of the proceedings i.e. filing of the suit till now. He has taken me through various orders passed in the proceedings. It is seen that the notice of motion filed for interim reliefs was rejected. The applicants carried the order of rejection to this court by filing appeal from order which was dismissed vide the order dated 10th January, 2002. The applicants then approached the Apex Court which continued the interim orders solely for the reason that the applicants have been operating the outlet for more than 70 years including 6 ½ years under the interim orders of the court after the termination of the * 8 * license. Without expressing any opinion on the merits of the dispute, the apex court deemed it appropriate that the interim order be continued till the disposal of the suit by the trial court, solely because of long continuation of the order. Carrying the same argument further, Mr.Sakhare submits that this has been continued till date and there has not been any similar incident or there has not been any new allegations of breach on the part of the applicants and therefore the interim order deserves to be extended. The basis for grant of interim orders pending the suit would be different from that for interim orders pending the appeal. The difference is that during the pendency of the suit, the judicial opinion on the application is solely based on the prima-facie view of the matter. However, when it comes to the first appeal, the judicial view is based upon evidence led by both the sides during the trial which evidence is tested by cross-examination and an opinion is formed by the court after full opportunity of hearing to both the sides. Therefore, once the trial court has decided the matter and if any orders to be passed contrary to the same, the court has to be slow and careful about the same, more so, in the matters of contractual relationships. 11. As already seen above, several of the breaches of the dealership agreement are admitted. It is admitted position * 9 * that on the date of the incident, there was a tanker lorry bearing no. HH-04-P-516 not belonging to the respondents found at the establishment loaded with motor spirit in a position of decapitation with the hose pipe connected to the delivery manifold of the tank lorry and the decapitation pipe of the underground MS tank. An attempt was made by the applicants to explain the presence of the lorry by contending that it was brought by the officers of the respondents and some third parties with a ulterior motive to malign the image of the applicants. They have however not been able to establish his claim by producing the necessary evidence. Therefore the serious breach of the dealership agreement and illegality stands clearly established. In these circumstances, it would be difficult to grant the interim order to the applicants. 12. Mr.Sakhare has submitted that it was incumbent upon the company to issue notice to the applicants before canceling the dealership agreement. According to him, the respondents were also required to follow Marketing Discipline Guidelines. The guidelines in cases of such breaches provides for minor punishments and an opportunity to the applicants to correct themselves. According to the applicants, this opportunity has been denied to them. They also allege that the respondents have adopted Marketing Discipline Guidelines in respect of * 10 * their other dealers and have provided opportunity to the other dealers. Perusal of the Marketing Guidelines show that the same are merely in the nature of administrative instructions and have neither the statutory status nor the contractual bindings. The lapses in the instant case being extremely serious and since the dealership agreement make provision for taking action in respect of minor breaches, the argument that the respondent ought to have adopted Marketing Discipline Guidelines does not impress me. As regards the notice before termination, the contract between the parties does not provide for the same. It provides for otherwise. Clause-19 of the Dealership Agreement enables the respondents to terminate and to revoke license forthwith on breaches of the stipulations at Clause-9 and omission of an act which is prejudicial to the interest or good name of the respondents. In any case, now there has been an opportunity for the applicants during trial to explain their conduct. 13. It is next argued by Mr.Sakhare that the raid conducted by the police on 4th/5th February, 1998 was illegal as police have no authority to inspect the petrol pump. Therefore, according to him no weight can be attached to the entire incident. Perusal of the record shows that the inspection carried out was not by the police but by the * 11 * officers of the respondents. The police on the night of 4th/5th February, 1998 noticed that some illegal activities were taking place at Cumballa Hill service station. They therefore called up the Chief Divisional Manager, Mumbai Division of the respondents and asked for the assistance of the officers of the respondents to conduct an investigation. The officers of the respondents along with the police officers and officers from the Food and Rationing Department were present at the time of inspection and the inspection was actively carried out by the officers of the respondents. Therefore, I find no substance in the last submission of the applicants also. 14. Having regard to the totality of the facts and circumstances of the case, in my opinion the applicants are not entitled to the interim relief of injunction as sought by them. Hence, the Civil Application is dismissed. 15. On the application of Mr.Sakhare, the ad-interim order is extended for a period of 10 weeks i.e.till 15th April, 2009. [SMT.R.P.SONDURBALDOTA, J]