HIGH COURT OF CHHATTISGARH, BILASPUR DB : Hon'ble Shri Raieev Gupta, C.J. & Hon'ble Shri Sunil Kumar Sinha. J. Writ Appeal No. 292 of 2009 M/s Chandra Prakash Service Station Vs. Hindustan Petroleum Corporation Limited & another JUDGMENT For consideration Sd/- Sunil Kumar Sinha Judge !.»» HON'BLE SHRI JUSTICE RAJEEV GUPTA Sd/- Chief Justice Post for Judgment: /f/02/2QJD- Sd/- wuuyt? /^/02/2010 8 HIGH COURT OF CHHATTISGARH.^ILASPUR DB: Hon'ble Shri Raieev Gupta, C.J. & Hon'ble Shri Sunil Kumar Sinha, J. Writ Aopeal No. 292 of 2009 APPELLANT M/s Chandra Prakash Service Station H.P. Petrol Pump, Village: Banbarad Ahiwara Road, Nandini, District Durg (C.G.) Through: Chandra Prakash Mandle, Sole Proprietor, R/o Plot No. 337/38 Street No. 2A, Pragati Nagar Risali, Bhilai, District Durg 490 006 (C.G.) t/ersus RESPONDENTS 1. Hindustan Petroleum Corporation Limited (A Govt. of India Enterprise) Registered Office: 17, Jamshedji Tata Road, Mumbai 400 020 Through : Sr. Regional Manager 2 Floor, Madina Manzil Medical College Road, Raipur 492 001 (C.G.) P.B. No. 129 2. Union of India Through: Secretary Ministry of Petroleum and Natural Gas Commission Government of India, New Delhi (WritAppeal underSection 2(1) ofthe Chhattisaarh Hiah Court (Appeal to Division Bench), Act 2006) Appearance: Mr. V.G. Tamaskar, Advocate for the appellant. Mr. P.S. Koshy,Advocate for respondent No.1. •sssssf1''•^' M2- Writ Apoeal No. 292 of 2009 JUDGMENT (/^ .02.2010) Following judgment of the Court was delivered by Sunil Kumar Sinha, J. (1) Being aggrieved with the judgment dated 7 of September, 2009 passed in W.P.(C) No. 3942/2008 by the learned single Judge of this Court, the appellant/petitioner has filed this writ appeal. (2) The facts, briefly stated, are as under:- The appellant was appointed as a dealer by an agreement dated 28.2.2005, entered into between Hindustan Petroleum Corporation Limited (hereinafter referred to as Corporation) and the appellant for running a retail outlet of petrol/diesel/motor oils/grease etc at Nandini, District Durg (C.G.). An inspection was carried out by M/s SGS India Private Limited in the retail outlet of the appellant on 24.12.2007 and samples were collected for conducting Marker Test on motor spirit and high speed diesel (MS & HSD). As per the test report received by the Corporation, the samples taken from the retail outlet of the appellant failed to meet the specifications. The said samples were tested on 26.12.2007 at Mandir Hasaud Depot in presence of the appellant and in presence of the Senior Sales Officer, Transporter, SGS Officials and Depot Officer. The T/T samples were also tested and the same were found to meet the specifications. An explanation was sought from the appellant on this account by issuing a letter dated 31 December, 2007. The appellant submitted reply vide letter dated 10.1.2008. According to the authorities of the Corporation, the explanation submitted by the appellant was not satisfactory. Therefore, a show cause notice was issued to the appellant on 22.2.2008. It was contended in the notice that the appellant has indulged in contemplating the petroleum products and has thus violated the Clause Nos. 4 (a), 19 (b), 19 (c) & 20 (a) ofthe dealership agreement dated 28.2.2005, therefore, why the dealership agreement may not be terminated. -* g '^' Writ Appeal No. 292 of2009 The proprietor of the appellant filed reply to the show cause notice on 29.2.2008. He pointed out many infirmities in the test conducted on 26.12.2007 and prayed for termination of the proceedings initiated under the show cause notice. However, the Corporation disagreeing with the grounds raised by the appellant in reply to the show cause notice and relying on the test conducted on 26.12.2007, held that the appellant was liable for contemplation of the petroleum products and terminated the dealership agreement under Clause 31 of the said agreement vide the impugned order dated 17.7.2008 (Annexure-P/4 in writ petition). It is at this stage, the appellant filed the writ petition for quashment of the termination order dated 17.7.2008 (Annexure- P/4), and for restoration of the dealership by issuing the appropriate writ(s). As contained in Para-13 of the impugned judgment, the appellant raised mainly two grounds before the learned single Judge. The first, there was no fact finding enquiry and the second that no termination order could have been issued against the appellant without referring the dispute to fhe Arbitrator under Clause 40 ofthe dealership agreement dated 28.2.2005. The learned single Judge held that a proper enquiry was conducted and further that the Corporation was not required to refer the matter to the Arbitrator under Clause 40 of the agreement before passing the impugned order of termination against the petitioner as it was a case of termination on account of committing breach of terms and conditions of Clauses 4 (a), 19 (b), 19 (c) & 20 (a) ofthe dealership agreement dated 28.2.2005. (3) Mr. V.G. Tamaskar, learned counsel appearing on behalf of the appellant, argued that no proper enquiry was conducted before termination of the agreement; the appellanf had disputed rnany facts ,n reply to the s.ow ca»se.o.ce, ^e.efore, e Corporation was required to ^^,^^3!^^ '"<tt' i^s ^ ^E^4'' ^ Writ Appeal No. 292 of 2009 refer the matter to the Arbitrator for taking a decision; and, without taking a decision from the Arbitrator no orders relating to the termination of the agreement could have been passed. Referring to the judgment rendered in the matter of Harbanslal Sahnia and Another-Vs- Indian Oil Corpn. Ltd. and Others. (2003) 2 SCC 107, he prayed for allowing the writ petition by setting-aside the impugned judgment passed by the learned single Judge. (4) On the other hand, Mr. P.S. Koshy, learned counsel appearing on behalf of respondent No.1, opposed these arguments and supported the judgment passed by the learned single Judge. He contended that a fair and proper opportunity of hearing was awarded to the appellant before termination of the agreement; a fair enquiry was conducted for testing the samples collected from the retail outlet of the appellant and when the samples failed to meet the specifications and the appellant could not offer reasonable explanation for the same, then only, the agreement was terminated as per Clause 31 of the said agreement. He also argued that before termination of the agreement, it was not incumbent upon the authorities ofthe Corporation to go forArbitration. (5) We have heard the learned counsel for the parties at length and have also perused the records of the writ petition. (6) We find that the samples collected from the retail outlet of the appellant were subjected to joint Marker Test on 26.12.2007. The document in this regard has been filed as Annexure-R/2, the contents whereof would show that following persons, including the proprietor of the .-^^3*ii ^;.f:c"% j II ^%^^ ?!s. '~S •^ v Writ Appeal No. 292 of 2009 ^' y appellant namely Chandraprakash Mandale, were present at the time of the test: "1) Harish Bhimte, I/C Depot Manager-Actg. Mandirhasaoud. 2) Suresh Vootla, Exe. Opns. Officer, Mandirhasaoud. 3) Abhijit U. Raut Sr. Sales Officer-Durg. 4) Chandraprakash Mandale, Dealer Chandraprakash Service Centre, Nandini. 5) Shree Bhatia, B.S. Bhatia Transport, Raipur. 6) Swapnil Kamble, Rep. M/S SGS, Nagpur. 7) Ajay Mankar, Rep. M/S SGS, Nagpur." Mr. Chandraprakash Mandale has signed the said documents. The report would show that the samples collected from the outlet of the appellant were found adulterated, whereas, the samples from TT Retention and Depot Retention were not found to be adulterated. Therefore, the appellant cannot take the ground that the Marker Test of the samples collected from its outlet were conducted behind their back and there is no genuineness in su.ch test. The appellant has tried to make out a case of deficiency in performing such test and has highlighted the other factors due to which the stocks may be adulterated by raising the grounds in the reply to the show cause notice but they have not been considered to be the good grounds by the Corporation for setting-aside the report ofthe test conducted on 26.12.2007. The learned single Judge has also dealt with the matter in detail. Therefore, it cannot be said that proper enquiry was not conducted and the appellant was not given due opportunity of hearing before passing the order by the Corporation. (7) So far as argument relating to requirement of referring the matter to the Arbitrator by the Corporation before passing the termination order is ^oncerned, the same is misconceive. Writ Appeal No. 292 of 2009 (8) Clause 31 of the agreement reads as under:- "31. Termination Notwithstanding anything to the contrary herein contained, the Corporation shall be at liberi:y at its entire discretion to terminate this agreement forthwith upon or at any time after the happening of any of the following events, namely:- (a) If the Dealer shall commit a breach or default of any of the terms, conditions, covenants and stipulations contained in this Agreement. (b) Upon : i) the adjudication as insolvent ofthe Dealer, ifthe dealer be an individual; ii) any change in the constitution of the partnership firm. (c) If any attachment is levied and continues to be levied for a period of seven days upon the effects of the Dealer, (d) If the Dealer shall be convicted of any criminal offence, (e) If a Receiver shall be appointed of any property or assets of the Dealer and the same shall not be discharged within seven days of the date of such appointment, (f) If the license or permit issued by the relevant authorities for the storage of Petrol/Diesel/Lubricants and other products supplied by the Corporation and for carrying on business is cancelled or modified or suspended or revoked or is not renewed before the date of expiry by such authority, (g) If the Dealer shall for any reason defaults in payment to the Corporation in full of outstandings as appearing in the CorporatiQn's books of account beyond four days of demand by the Corporation, (h) If the dealer has concealed any information and if any information given by the Dealer in the application for appointment as a Dealer or in any document supplied therewith or filed in support thereof shall be found to be false, untrue or incorrect, (i) If the lease/tenancy of the premises and the facilities held by the Corporation shall be terminated or purported to be terminated or comes to an end for any reason whatsoever, '» ^^J^S^ "BaeSs^ •L - ^ ».. !i: Writ Appeal No. 292 of2009 (j) If the Dealer does not adhere to the instructions/guidelines issued from time tb time by the Corporation, (k) If the Dealer allows the Dealership to be operated as 'Benami' or causes the same to be operated through any Power of Attorney or otherwise by any outside party, (1) If the dealer shall commit or suffer to be committed any act which, in the opinion of the Director (Marketing) of the Corporation is prejudicial to the interest or good name of the Corporation or its products, (m) If the dealer shall commit a breach or default of any of the terms, conditions, covenants and stipulations contained in separate loan agreement which the dealer had executed with the Corporation under which the dealer has secured the financial assistance from the Corporation for operating the dealership awarded in favour ofthe dealer, (n) If the Dealer shall contaminate/adulterate or tamper with the quality of any of the products supplied by the Corporation, (o) If the Dealer sells any of the product supplied by the Corporation at prices higher than those fixed by the Corporation/Statutory Authority. The Corporation's right to terminate the agreement under the terms of this Clause shall be without prejudice to and without affecting any of its other rights and remedies against the dealer. In the event 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 Petrol/Diesel/Lubricants and other 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 license granted hereunder." (9) The aforesaid provision i.e. Clause 31 ofthe agreement, beginning with the Non Obstinate Clause, is an independent Clause which has nothing to do with the provisions of Arbitration contained in Clause 40 of the Agreement. Sub-clause (n) of Clause 31 clearly provides that if the 'l^ Writ Auoeal No,292M2009 Dealer shall contaminate/adulterate or tamper with the quality of any of the products supplied by the Corporation, the Corporation shall be at liberty at its entire discretion to terminate the agreement forthwith. The provisions of this Clause, therefore, is not subject to any other Clause including the Arbitration Clause of the Agreement. Therefore, we do not find any force in the said arguments. (10) In Harbanslal Sahnia's (supra), the view taken by the High Court was 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 dismissed. The Apex Court said that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. It was laid down that 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 jurisdiction or the vires of an Act is challenged." The Apex Court held that the petitioners' license was cancelled relying on an irrelevant and non-existent cause and the case of the petitioners attract applicability of the first two contingencies. Therefore, the petitioners should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings. In the present case, the writ Court has entertained the writ petition and has not dismissed the same on the ground of availability of the alternative (fs ^^'^ -~"'a;S: 's':3 '"'.... "w/^ '*»»s-wi^'' -—», 01 WdtApBeal No. 292 of 2009 remedy of Arbitration. This is also not a case in which the license of the appeltant has been cancelled on irrelevant and non-existent cause, therefore, the aforesaid judgment is of no assistance to the appellant. (11) For the foregoing reasons, we do not find any scope for interference in the order passed by the learned Single Judge in this intra- court appeal. The appeal is liable to be dismissed and is hereby dismissed. vatti (12) There shall be no order as to cost. Sd/- Chief Justice Sd/- Sunil Kumar Sinha Judge ¥r