Calcutta High Court (Appellete Side)
Prabir Kumar Baidya vs The Union Of India & Ors on 14 January, 2022
Author: Moushumi Bhattacharya
Bench: Moushumi Bhattacharya
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Present:
The Hon'ble Justice Moushumi Bhattacharya
WPA 10713 of 2018
Prabir Kumar Baidya
Vs.
The Union of India & Ors.
For the Petitioner : Mr. Biswaroop Bhattacharya, Adv.
Mr. Pritam Chowdhury, Adv.
Ms. Priti Banerjee, Adv.
Mr. Abhisek Addya, Adv.
For the Respondent Nos. 2 to 6 : Mr. M.S. Yadav, Adv.
Ms. Saswati Chatterjee, Adv.
Ms. Satabdi Naskar (Kundu), Adv.
For the Respondent No. 7 : Mr. Soumava Mukherjee, Adv.
Last Heard on : 20.12.2021.
Judgment on : 14.01.2022.
Moushumi Bhattacharya, J.
1. The point of maintainability, as argued by learned Counsel appearing for the parties, is whether the presence of an arbitration 2 clause would act as an impediment to the petitioner approaching a Writ Court under Article 226 of the Constitution of India.
2. The writ petitioner has challenged an order of termination dated 19th February, 2021 by the Executive Director & State Head of the Indian Oil Corporation (IOC). The petitioner has challenged the termination on grounds including that of arbitrariness and violation of the fundamental rights of the petitioner. According to learned counsel appearing for the petitioner, the arbitration clause in the Distributorship Agreements dated 29th January, 1990 would not act as a bar since the petitioner's case would fall under the exceptions in Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Ors.; (1998) 8 SCC 1.
3. Learned counsel appearing for the IOC submits that the writ petition is liable to be dismissed as the petitioner has failed to avail of the alternative remedy provided in the Distributorship Agreement, namely, seeking a reference of the disputes to arbitration. Counsel refers to decisions in support of his contention that a Writ Court should not entertain petitions where the petitioner has failed to exhaust the available alternative remedy. Although counsel had primarily urged the question of maintainability of the writ petition, the factual aspect has 3 also been shown to the Court to put emphasis on the impugned order of termination. The issue of maintainability is being addressed first.
4. M/S Radha Krishan Industries Vs. The State of Himachal Pradesh & Ors.; (2021) 6 SCC 771 is a recent pronouncement of the Supreme Court on this aspect. The principles of law relevant to the present writ petition were summarized by the Supreme Court in Paragraph 27 therein. The Court reiterated those exceptions to the rule of alternative remedy where (a) the writ petition has been filed for the enforcement of a fundamental right; (b) there has been a violation of the principles of natural justice; (c) the proceedings are wholly without jurisdiction and (d) the vires of a legislation is challenged. The Supreme Court relied on Whirlpool and all the decisions pertinent to the issue and held that where a right is created by a statute which itself prescribes the remedy for enforcing the right, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. Harbanslal Sahnia & Anr. Vs. Indian Oil Corporation Ltd. & Ors.; (2003) 2 SCC 107 considered the implication of the presence of an arbitration clause in the agreement and held that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. The Supreme Court relied on Whirlpool and noted that the petitioners' dealership was terminated for an irrelevant and non-existent cause and 4 that the petitioners should have been allowed relief by the Uttaranchal High Court instead of driving them to arbitration proceedings.
5. The decisions placed on behalf of the IOC held that existence of an arbitration clause requires that the parties should first adopt that remedy; ref : State of UP & Ors. Vs. Bridge and Roof Company (INDIA) Ltd.; (1996) 6 SCC 22 and Empire Jute Company Ltd. & Ors. Vs. Jute Corporation of India Ltd. & Anr.; (2007) 14 SCC 680. Kerala State Electricity Board & Anr. Vs. Kurien E. Kalathil & Ors.; (2000) 6 SCC 293 and Joshi Technologies International Inc. Vs. Union of India; (2015) 7 SCC 728 have also been placed for the circumstances where a Writ Court would not exercise its discretion. A decision of a learned Single Judge of this Court (as His Lordship then was) in Sri Sajal Mandal vs. The Indian Oil Corporation; WP No. 22927(W) of 2018 has been shown where the writ petition was dismissed on the existence of an arbitration agreement contained in the Distributorship Agreement between the parties.
6. The consistent view of the Supreme Court has been that there cannot be an absolute bar to the maintainability of a writ petition even where there are disputed questions of fact or the dispute arises from contractual matters. The Supreme Court has opined that the distinction between public law and private law cannot be demarcated 5 with precision and that each case has to be examined on its facts to ascertain whether the contractual relations between the parties bear the insignia of public element (Joshi Technologies). Radha Krishan Industries reinforced this principle by holding that an alternative remedy by itself does not divest the High Court of its power under Article 226 in an appropriate case although a writ petition should not be entertained when an efficacious alternative remedy is provided by law. The exceptions to the rule of alternative remedy were also enumerated in the said judgment, namely a writ petition being filed for the enforcement of a fundamental right; or the violation of the principle of natural justice; or where the order is without jurisdiction and a challenge made to the vires of a legislation. Recently the Supreme Court in Unitech Limited vs Telangana State Industrial Infrastructure Corporation (TSIIC) 2021 SCC OnLine SC 99 held that presence of an arbitration clause in a contract between a State instrumentality and a private party will not act as an absolute bar to availing remedies under Article 226 if the State instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably.
7. Upon considering all the decisions placed on behalf of the parties, this Court is of the view that the question whether the writ petitioner should be disentitled to relief under Article 226 must be determined with reference to the exceptions to the rule of alternative 6 remedy as laid down by the pronouncements of the Supreme Court. The particular facts in each case would hence assume importance as the Court must ascertain whether there has been a violation of the principles of natural justice or whether the petitioner seeks enforcement of a fundamental right protected under Part III of the Constitution of India.
8. The petitioner's Distributorship Agreement was terminated by the impugned order dated 19th February, 2021 and hence there is no doubt that the petitioner's rights under Article 19(1)(g) of the Constitution of India- the fundamental right guaranteed to a citizen to practice any profession or to carry on any occupation, trade or business has been affected. IOC is admittedly an authority under Article 226. The decided case-law of the subject where the IOC was a party proceeds on that basis. The petitioner has hence fulfilled one of the two criteria laid down in Whirlpool and Radha Krishan Industries, namely that the writ petition must be filed for enforcement of a fundamental right protected under Part III of the Constitution.
9. The next question which must be gone into is whether there has been a breach of the principles of natural justice arising out of the fact that the hearing given to the petitioner was inadequate and ineffective. The impugned order of termination of 19th January, 2021 was in 7 continuation of a show cause issued by the IOC to the petitioner for termination of the LPG distributorship. The impugned order is the outcome of a hearing given to the parties on 9th January, 2021. The termination was based on violation of Clause No. 27 of the dealership agreement- delay, breach or default of any of the terms contained in the Agreement by the distributor and failure to remedy such breach within four days of the receipt of a written notice from the Corporation. The Order refers to a complaint received by IOC from one Swati Rai stating that she had provided financial assistance to the petitioner resulting in a Deed of Partnership between the petitioner and Swati Rai. The order refers to a second complaint of Swati Rai and a meeting of 28th July, 2020 and comes to the conclusion that no deed of cancellation of the partnership agreement between the petitioner and Swati Rai was signed by the latter and that a forged cancellation deed has been submitted by the petitioner. The conclusion was reached after recording the submissions made on behalf of the petitioner to the effect that Swati Rai had indeed executed the dissolution of the partnership agreement dated 9th November, 2016 and that the deed of cancellation is a genuine document. The Executive Director arrives at a finding that the petitioner did not raise any such objection at the meeting held on 28th July, 2020 and that further the petitioner does not have any additional documents to prove the petitioner's case. The conclusion is that the 8 petitioner has intentionally misled the Corporation by producing forged documents which is in violation of the Distributorship Agreement.
10. It is evident from the impugned order that the Executive Director merely proceeded on the dissolution of the partnership deed relied on by the petitioner as a forged document and most significantly, that the petitioner had not raised any objection with regard to the signature of Swati Rai at an earlier meeting on 28th July, 2021. These are the only two grounds on which the LPG dealership of the petitioner was terminated. From the records it appears that the Executive Engineer did not go into any enquiry or details to determine the veracity of the deed of cancellation of the partnership deed dated 29th June, 2018 or the deed of revocation of the power of attorney dated 3rd August, 2018 or even the Public Notice dated 5th March, 2020 stating that the registered power of attorney given to Swati Rai has been revoked. There is also no examination on the issue of forgery which was disputed by the petitioner. The only ground taken is that the petitioner did not raise any objection at the meeting held 7 months earlier on 28th July, 2020.
11. The irrationality of the impugned order becomes stark when seen against earlier factual events. The petitioner had been called upon to pay a ratification fee of Rs. 16,54,846.75/- by the IOC on 9th 9 January, 2019. The petitioner paid such amount in full. However, a second show-cause notice was issued by IOC on 20th November, 2020 in continuation with the previous show cause of 16th October, 2018 on the basis of a second complaint by Swati Rai. The fact that IOC recovered Rs. 16.54 lakhs from the petitioner but decided to continue with the earlier show-cause on the basis of a complaint received from Swati Rai on the same allegation, i.e. dissolution of the partnership deed, speaks volumes of the arbitrary conduct on the part of IOC. The dictum of the Supreme Court in Sarvepalli Ramaiah & Ors. Vs. District Collector, Chittoor District (2019) 4 SCC 500 may be seen as a reference point in this context. In that decision, the Supreme Court held that the High Court's extraordinary power of judicial review can be exercised where a decision is vitiated by irrationality, where no person acting reasonably could possibly have taken the decision having regard to the materials on record. The principles of natural justice require that a party be given a full, complete and effective hearing and further that nobody shall be a judge of his own case coupled with a duty to assign reasons. The duty to comply with the principles of natural justice becomes all the more significant where civil consequences would follow from an action of a statutory authority; (Ref: Rajesh Kumar Vs. DY. CIT; (2007) 2 SCC 181). The Executive Director & State Head of IOC was the decision-making authority in this case leading to a presumption that 10 the principles of natural justice were not given due weightage since the interests of IOC became the most important consideration. The civil consequences of the impugned action are unmistakable; the petitioner has suffered the consequence of cancellation of his distributorship by the impugned order. IOC was duty-bound to consider and deal with all factual issues raised by the parties before taking a decision depriving the petitioner of his livelihood and causing him immediate prejudice. Irrationality of the decision-making authority in finding the petitioner to be in breach of the agreement coupled with the sequence of events leading to the impugned order together with IOC deciding a matter involving its own interest persuades this Court to hold that the petitioner comes within the exceptions to the rule discouraging interference by a Writ Court on the ground of an efficacious alternative remedy being available to the petitioner. The rule of exclusion of writ jurisdiction by availability of an alternative remedy is also a matter of discretion which is to be exercised by the Writ Court. It cannot be seen as a rule which is to be applied in all cases regardless of glaring instances of violation of natural justice or where the grievance relates to enforcement of a fundamental right.
12. Since the question of maintainability has been answered taking into account the particular facts in the present writ petition, the merits of the matter have also been gone into, the point taken on behalf of IOC 11 of the petitioner not challenging the Order of the Executive Director (LPG) of the IOC- described as the Appellate Authority- should also be dealt with. The said Order dated 10th June, 2021 arose out of an order passed by this court dated 5th May, 2021 directing the petitioner to proceed with the appeal pending before the Appellate Authority. After considering the relevant provisions of the Marketing Discipline Guidelines, 2018, the Appellate Authority held that the appeal filed by the petitioner is not maintainable. The Appellate Authority recorded that it had not entered into the merits of the case and that the petitioner (appellant before the Appellate Authority) was at liberty to proceed in any other forum, as he may be advised. The requirement of exhausting a statutory remedy before invoking the discretionary remedy under Article 226 does not arise in the present case since the petitioner has already availed of the appeal before the Appellate Authority.
13. This Court is therefore of the view that the petitioner is not required to challenge the order of the Appellate Authority in the present writ petition.
14. WPA 10713 of 2021 is allowed in view of the reasons as stated above. The impugned order dated 19th February, 2021 is set aside. The concerned respondents are directed to take appropriate steps without further delay. The writ petition is disposed of accordingly. 12 Urgent Photostat certified copy of this Judgment, if applied for, be supplied to the parties upon compliance of all requisite formalities.
(Moushumi Bhattacharya, J.)