Gujarat High Court
Mohanbhai Mangaldas Dabhi vs Bharat Petroleum Corporation Limited on 5 March, 2018
Author: Rajesh H.Shukla
Bench: Rajesh H.Shukla
C/SCA/9768/2009 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 9768 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE RAJESH H.SHUKLA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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MOHANBHAI MANGALDAS DABHI
Versus
BHARAT PETROLEUM CORPORATION LIMITED
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Appearance:
SHIVANI RAJPUROHIT for the PETITIONER(s) No. 1,2
MR MITUL K SHELAT(2419) for the RESPONDENT(s) No. 1
RULE SERVED for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE RAJESH H.SHUKLA
Date : 05/03/2018
ORAL JUDGMENT
1. The present petition is filed by the petitioners under Articles 14, 19(1)(g), 21 and 226 of the Constitution of India for the prayer inter alia that appropriate writ, order or direction may be issued Page 1 of 17 C/SCA/9768/2009 JUDGMENT quashing and setting aside the letter dated 9.9.2009 terminating the dealership agreement entered into between the Petitioner and Respondent and also further direction to the Respondents to grant such permission to continue the running of petrol pump and has also prayed for stay of the impugned order dated 9.9.2009 on the grounds stated in the memo of petition.
The facts of the case briefly summarized are as follows.
2. The petitioner has been allotted a dealership of M/s Bharat Petroleum Corporation in the year 1984 and had started selling diesel from the said pump since 1986. The agreement is also said to have been entered into between the Petitioner and the Respondent. The inspection of the retail outlet was conducted by PFS Mobile Lab on 15.12.2006. However, after the visit, some report was made of HSD and the petitioner is said to have failed to meet the requirement of HSD with respect to Density and Kinematics Viscosity. Thus, the case of the petitioner is that the father of the petitioner expired on the same day and he was called for the inspection and had signed the pre-drafted documents in English language. However, the petitioner made the representation on receipt of the communication dated 17.12.2006. However, a show cause notice dated 5.3.2007 came to be issued and the petitioner had replied to the same. The impugned communication Page 2 of 17 C/SCA/9768/2009 JUDGMENT dated 9.9.2009 came to be passed terminating the dealership which has lead to filing of the present petition.
3. Affidavit-in-reply has been filed by the Respondent with greater detail as to what has transpired and it has been contended that the dealership agreement was executed between the parties. In terms of the dealership agreement the petitioner agreed not to adulterate the petroleum product supplied by the Company. However, Section 13(a) of the agreement provided for termination of license on account of default in carrying out the terms and conditions. It is also stated in detail that when the inspection was made by the PFS Mobile Lab and when the petitioner failed to meet the requirement of the HSD regarding Density and Kinematics Viscosity, the petitioner was called upon by show cause notice to explain. Thereafter, the impugned decision has been taken. It is also contended that the present petition under Article 226 may not be entertained as it is a decision taken pursuant to the agreed terms of the contract between the parties and not in exercise of statutory powers. Therefore, it is contended that the reliefs prayed for may not be granted. It is specifically stated that the dispute is in the realm of private law and may not be adjudicated in exercise of discretionary jurisdiction under Article 226 of the Constitution of India. It is also contended that the contentions raised referring to Page 3 of 17 C/SCA/9768/2009 JUDGMENT the violation of principles of natural justice or mala fide and bias are without any basis.
4. Affidavit-in-rejoinder is filed by the petitioner reiterating the contentions raised in the petition. It has been contended referring to the judgment of the Hon'ble Apex Court that the Respondent Authority cannot be permitted to act arbitrarily and oppose Articles 14 and 21 of the Constitution of India. It is contended that the petition is also maintainable for enforcement of contractual obligation, and discretion under Article 226 could be exercised in spite alternate remedy. It is therefore contended that the decision could be reviewed as to whether the action is in violation of Article 14 of the Constitution of India or not. It is contended that the action is not a public interest and it is unfair and unreasonable and violation of Article 14, and therefore, the writ petition would be maintainable. It is contended that adequate opportunity to challenge the PFS Mobile Lab test conducted on 15.12.2016 was denied and the present petition may be allowed.
5. Sur-Rejoinder is also filed by the Respondents.
6. Heard learned Advocate Ms. Shivani Rajpurohit for the petitioner and learned Advocate Shri Mitul K. Shelat for the Respondent.
7. Learned Advocate Ms. Shivani Rajpurohit for the petitioner submitted that no opportunity was given to the petitioner to counter Page 4 of 17 C/SCA/9768/2009 JUDGMENT or challenge the PFS Mobile Lab report. She contended that the guidelines or the rules of dealership agreement have not been followed. Learned Advocate Ms. Shivani Rajpurohit referred to the show cause notice and submitted that the reply has been given. She submitted that the PFS Mobile Lab report has not been provided which is relied upon.
8. Learned Advocate Ms. Shivani Rajpurohit referred to the Market Discipline Guidelines 2005 and submitted that, as provided, if the sample was not sent within ten days, it would cause prejudice to the rights of the petitioner. Reference is made to the judgment of the Hon'ble Apex Court in case of HPCL v. Super Highway Services reported in (2010) 3 SCC 321. Similarly she has referred to and relied upon the judgment of the Hon'ble Apex Court in case of Bharat Petroleum Corporation Limited v. Jagannath And Company and Ors. reported in (2013) 12 SCC 278 and emphasized the observations made in paragraph 13 and 16.
9. Learned Advocate Shri Mitul K. Shelat for the Respondent has referred to the papers and submitted that the petition is not maintainable. The petitioner is given the dealership by a contract and when there is breach of the terms and conditions, the termination has been made which cannot be challenged in the petition. Learned Advocate Shri Mitul Shelat submitted that Page 5 of 17 C/SCA/9768/2009 JUDGMENT mutual rights and obligations are to be considered arising under the contract in appropriate proceedings in civil court and therefore the petition under Article 226 may not be entertained. He submitted that the court may also consider whether the decision by the Respondent is amenable to judicial review. He submitted that the terms of the commercial contract between the parties are required to be considered and the decision arrived at has to be considered on the basis of the terms and conditions of the agreement. He submitted that such a dealership is for distribution of the essential commodity and therefore the Respondent Company may have considered the consequences to maintain the supply of unadulterated quality to the public and therefore public interest is also required to be considered. He therefore submitted that the interest of the Respondent Company and also the society at large is required to be considered.
10. Learned Advocate Mr. Mitul Shelat referred to the show cause notice produced at Annexure-C and the reply to the show cause notice given by the petitioner at Annexure-E. He submitted that the impugned decision at Annexure-G regarding termination of dealership is taken after considering the inspection or the reply to the show cause notice. Learned Advocate Mr. Mitul Shelat submitted that reference is made to Clause 13(A) of the Dealership Page 6 of 17 C/SCA/9768/2009 JUDGMENT Agreement under the Guidelines of 2005. He submitted that the submission that no opportunity has been given and therefore this decision is taken in violation of principles of natural justice is misconceived. Learned Advocate Mr. Mitul Shelat submitted that the petitioner has not raised any objection when the sample was taken in his presence on the spot and also it is signed by the petitioner. He therefore submitted that the submission that he was made to sign is not believable.
11.Learned Advocate Mr. Mitul Shelat referred to the PFS Mobile Lab test report and other record to support his contention about the lapses. He submitted that even on subsequent inspection on 17.12.2006 by the Assistant Manager who verified with reference to the stock variation in HSD also found that there is some discrepancy.
12. Therefore learned Advocate Shri Mitul Shelat strenuously submitted that since the issue involved is in the realm of contract, the scope of judicial review in exercise of discretion under Article 226 may be very limited. Learned Advocate Shri Mitul Shelat submitted that if there was any doubt about the veracity of the first report, the question of second report may arise. Therefore, as the petitioner has not questioned the first report or the veracity of the report, there is no question of any further report. Learned Page 7 of 17 C/SCA/9768/2009 JUDGMENT Advocate Mr. Mitul Shelat referred to the dealership guidelines and submitted that it provides that the petitioner has to request for retesting, and as there is no discrepancy or doubt about the first report, such a contention raised subsequently may not be accepted.
13. Learned Advocate Mr. Mitul Shelat submitted that the submission that the report is not made available cannot be considered as violation of natural justice. He submitted that in any case it is a case of "substantial compliance". Learned Advocate Mr. Mitul Shelat therefore submitted that whether the decision could be a subject matter of judicial review in a petition under Article 226. In support of this contention he has referred to and relied upon the judgment of the Hon'ble Apex Court reported in (2011) 12 SCC 749 in case of Ankur Filling Station v. Hindustan Petroleum Corporation Limited and Anr. Similarly, he has referred to and relied upon the judgment of the High Court reported in 2011 (3) GLR 2212 in case of Natvarlal & Sons Through Partner v. Bharat Petroleum Corporation Ltd. Through Managing Director & Anr. and emphasized the observations made in paragraph 18.
14.Learned Advocate Mr. Mitul Shelat submitted that the facts of the case may be analyzed for the purpose of the submissions which have been made. He submitted that there is no dispute about the Page 8 of 17 C/SCA/9768/2009 JUDGMENT fact that the inspection was made. It is not in dispute that the petitioner was present. In his presence the sample was taken and tested by the Mobile Laboratory at the spot and the report has been made. The said report is also signed by the petitioner and therefore there is no question of raising any doubt about the veracity of the report. Learned Advocate Mr. Mitul Shelat submitted that the additional report also support the findings in the first report and therefore the submissions which have been made are misconceived and are raised as an afterthought.
15.Learned Advocate Ms. Shivani Rajpurohit in rejoinder referred to the test report by the Mobile Laboratory and submitted that whether it is prejudicial or not could be considered after it is provided to the petitioner. She submitted that as no such report has been submitted to the petitioner, the reliance placed on such report would cause prejudice and therefore it is in violation of rules of natural justice. Learned Advocate Ms. Shivani Rajpurohit submitted that the test report on the spot would depend upon the relevant material and it has to be examined on case to case basis or the situation, and therefore, the present petition may be allowed.
16.In view of the rival submissions, it is required to be considered whether the present petition deserve consideration.
17.As it transpires from the record and rival submissions, the Page 9 of 17 C/SCA/9768/2009 JUDGMENT inspection was made on the spot by the Mobile Lab where the discrepancies as recorded were found with regard to the Density and Kinematics Viscosity. The show cause notice at Annexure-C provided an opportunity to the petitioner to give the explanation. The clause in the agreement which has been referred to in the show cause notice clearly provide that it was obligatory for the licensee not to adulterate the products supplied by the Company and it has also been provided in Clause 13 that if the licensee is found guilty of breach of condition or stipulation, the license could be terminated. After providing an opportunity, the impugned order at Annexure-G dated 9.9.2009 came to be passed with detailed reference to the show cause notice, the explanation and the findings. It has been clearly recorded that another sample of HSD was sent to the Stationary Authorized Laboratory at Kandla for further testing. It is recorded:
"Another sample of HSD drawn from the RO in the said inspection was sent to Stationary Authorized Laboratory, at Kandla for further testing. The sample again failed to meet the requirement of HSD in respect of density, kinematics viscosity and also in respect of requirement of total Sulphur where as supply location sample so tested meets the requirement of density, kinematics viscosity. On subsequent inspection of 17.12.06 by our Asst Manager Sales, stock variation in HSD was found which was beyond permissible limit. This clearly shows that product was adulterated. Your Page 10 of 17 C/SCA/9768/2009 JUDGMENT contention that you signed the papers hastily without reading does not hold water."
18. Therefore, it is not that only one test report on the spot is forming the basis for decision for termination of the dealership agreement. There was another test of the sample and it conformed with the first report that the sample failed to match the requirement of density, kinematics viscosity. Not only that but even thereafter on 17.12.2006 when the Assistant Manager had verified the stock it was beyond the permissible limit suggestive of some irregularity. It is in this premises, the submissions made by learned Advocate Shri Mitul Shelat with much emphasis on the aspect of judicial review require consideration. It is required to be stated that the submission that the issue involved is in the realm of contract between the parties and the petition may not be entertained or may not be maintainable under Article 226 require to be examined. It is required to be stated that such submission may have different shades inasmuch as the scope of judicial review at the threshold while providing an opportunity and equal treatment to all at the time of entering into contract or providing such largess of the dealership is one thing and thereafter when the parties have entered into an agreement with mutual rights and obligations they would be governed by the terms of the contract. Thereafter as the issue Page 11 of 17 C/SCA/9768/2009 JUDGMENT involved is in respect of providing an opportunity or to consider for the purpose of allotment of dealership at the threshold but, after the dealership is given and the parties have entered into a dealership agreement with mutual rights and obligations, they are required to be governed by such terms of contract and obligations. The Hon'ble Apex Court in a judgment reported in (2004) 3 SCC 553 in case of ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Ltd. and ors. has made the observations with reference to the scope of exercise of discretion under Article 226 of the Constitution of India observing that the power of the High Court to issue writ under Article 226 of the Constitution of India is plenary and not limited by other provisions of Constitution. However, at the same time, a word of caution has been expressed that normally the High Court will not exercise such power to the exclusion of other available remedies unless the action of the State or the instrumentality of the State is arbitrary or unreasonable or in violation of the constitutional mandate. Similarly, the observations have been made in a judgment of the Hon'ble Apex Court reported in (2002) 1 SCC 216 in case of State of Bihar and Ors. v. Jain Plastics and Chemicals Ltd. wherein the Hon'ble Apex Court has made the observation:
"Settled law - writ is not the remedy for enforcing contractual Page 12 of 17 C/SCA/9768/2009 JUDGMENT obligations. It is to be reiterated that writ petition under Article 226 is not the proper proceeding for adjudicating such disputes. Under the law, it was open to the respondent to approach the Court of competent jurisdiction for appropriate relief for breach of contract. It is settled law that when an alternative and equally efficacious remedy is open to the litigant, he should be required to pursue that remedy and not invoke the writ jurisdiction of the High Court. Equally, the existence of alternative remedy does not affect the jurisdiction of the Court to issue writ, but ordinarily that would be a good ground in refusing to exercise the discretion under Article 226."
Therefore, it not a lack of jurisdiction but rather propriety by exercise of such discretionary jurisdiction.
A useful reference can be made to the observations made by the Hon'ble Apex Court in a judgment in case of Union of India v. Rajasthan High Court and Ors. reported in AIR 2017 SC 101 = (2017) 2 SCC 599.
19.The Hon'ble Apex Court in a judgment reported in (2004) 3 SCC 553 in case of ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Ltd. and Ors. has made the observations referring to the judicial pronouncement and the scope of review in such matters. The Hon'ble Apex Court has quoted the earlier judgment of the Hon'ble Apex Court in case of LIC of India v. Escorts Ltd. reported in (1986) 1 SCC 264 and Page 13 of 17 C/SCA/9768/2009 JUDGMENT has made the observations:
"If the action of the State is related to contractual obligations or obligations arising out of the tort, the court may not ordinarily examine it unless the action has some public law character attached to it. Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. It is impossible to draw the line with precision and we do not want to attempt it. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of the action and a host of other relevant circumstances. When the State or an instrumentality of the State ventures into the corporate world and purchases the shares of a company, it assumes to itself the ordinary role of a shareholder, and dons the robes of a shareholder, with all the rights available to such a shareholder. There is no reason why the State as a shareholder should be expected to state its reasons when it seeks to change the management, by a resolution of the company, like any other shareholder."
Again, it has been discussed referring to the scope of Article 226 of the Constitution of India that;
"The power to issue prerogative writ under Article 226 is plenary in nature and is not limited by other provisions of the Constitution. However, the court has imposed upon itself certain restrictions in exercise of this power observing that this plenary powers of the Page 14 of 17 C/SCA/9768/2009 JUDGMENT High Court to issue prerogative writ will not normally be exercised by the court to the exclusion of other available remedy unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14."
Similarly, the reliance could be placed on the observations made by the Hon'ble Apex Court in a judgment in case of JSW Infrastructure Limited and Anr. v. Kakinada Seaports Limited and Ors. reported in (2017) 4 SCC 170 wherein the Hon'ble Apex Court, referring to the judgment in case of Tata Cellular v. Union of India reported in (1994) 6 SCC 651 has made the observation laying down the broad guidelines with regard to the scope of exercise of such discretion.
20.Moreover, if there is any arbitrariness in the guise of exercise of statutory powers or the procedure, the court may, in a given case examine in a petition under Article 226 of the Constitution of India. Therefore, even if it is accepted that the scope of judicial review would permit examination of material, the scope would be limited. It is also well settled that in such matters of contractual obligations, even if the decision is examined and scrutinized under concept of judicial review, the scope would be limited to the extent examining whether the decision making process is just and fair. In other words it is not the decision but the decision making Page 15 of 17 C/SCA/9768/2009 JUDGMENT process which is required to be considered so as to satisfy that the procedure is fair and not arbitrary and it is in compliance with the rules of natural justice. As stated above, the decision making process also cannot be said to be arbitrary or in violation of rules of natural justice when the show cause notice has specifically referred to the aspect of contract as well as the lapses. The opportunity has been given and after the response is given by the petitioner, it has been examined as stated above and on the basis of the relevant material, the decision is arrived at as per the terms of the contract which permit the Respondent Company to terminate such dealership for breach of condition or any violation or the lapses. Therefore, as rightly submitted, once the parties have entered into an agreement, they would be governed by mutual rights and obligations under the contract. Even assuming that the decision could be subject to scrutiny under the concept of judicial review, even then the scope would be limited to see that it meets the requirement of fairness and principles of natural justice. Therefore, as observed by the Hon'ble Apex Court, once the parties have entered into a contract prescribing the mutual rights and obligations, they would be governed by the terms of the contract. Therefore, it may not justify the exercise of discretion under Article 226. Even if the decision of the Respondent is tested under Page 16 of 17 C/SCA/9768/2009 JUDGMENT the judicial review it could be limited to the extent of examining whether it is fair and in compliance with rules of natural justice. What is required to be seen is the decision making process. Thus, once it is found that the decision has been arrived at in compliance with the rules of natural justice and as per the terms of the contract providing for such option with the Respondent Company to terminate such agreement on the basis of breach or lapses by the other side like the petitioner which would not justify exercise of discretionary jurisdiction under Article 226. Therefore, on both the counts whether the petition would be maintainable under Article 226 when the issue is in the realm of contract and even if the decision is considered under the judicial review the scope would be limited to satisfy about the decision making process. Therefore, on both counts, the court is of the opinion that it would not justify exercise of discretionary jurisdiction under Article 226. Therefore, the present petition deserves to be dismissed and accordingly stands dismissed. Rule is discharged. Interim relief granted earlier stands vacated.
(RAJESH H.SHUKLA, J) J.N.W Page 17 of 17