Calcutta High Court (Appellete Side)
Sri Sajal Mandal vs The Indian Oil Corporation Ltd. & Ors on 17 September, 2024
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IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
Present: - Hon'ble Mr. Justice Subhendu Samanta.
WPA 22927 of 2018
IN THE MATTER OF
Sri Sajal Mandal.
Vs.
The Indian Oil Corporation Ltd. & Ors.
For the Petitioners : Mr. Kallol Kumar Basu, Adv.,
Mr. Atreya Chakraborty, Adv.,
Mr. Subrata Ghosh, Adv.,
Mr. Sudipto Panda Adv.
For the IOCL : Mr. M.S. Yadav, Adv.,
Ms. Saswati Chatterjee , Adv.,
Ms. Satabdi Naskar (kundu) Adv.
Reserved on : 13.08.2024
Judgment on : 17.09.2024
Subhendu Samanta, J.
1. The Indian Oil Corporation Limited (shall be referred to as "IOCL", hereinafter) issued a public notice for selection of distribution of Liquid Petroleum Gas (LPG) under Rajiv Gandhi Gramin Liquid Petroleum Gas Vitark (RGGLV) distributorship under IOCL at Panchmora, PS- Taldangra Dist- Bankura.
2. The petitioner applied for the said distributorship and in pursuance a lottery held by IOCL, petitioner was selected for the distributorship for the said area. The petitioner offered a 2 land measuring 14 decimal for construction of godown and showroom which he purchased vide a registered deed of sale dated 24.11.2010 being No. 4561 of 2010 from one Sri. Bimal Chandra Nandi, while purchasing the said land the petitioner made search and also obtained heirship certificate from the Pradhan of the concern Panchyaet certifying the sole ownership of Bimal Chandra Nandi over the land. Thereafter his name was duly recorded in the record of right by the office of the Block Land & Land Reforms Officer. Initially, letter of intent (LOI) was issued by the IOCL in favour of the petitioner and afterwards in compliance of necessary formalities by the petitioner with the IOCL and its allied organisations, the IOCL entered into an agreement with the petitioner. By way of such agreement dated 27th February, 2012, petitioner granted license of PGGLV at Panchmura and received a letter of appointment.
3. It is also the case of the petitioner that after issuance of such license it came to the notice of the petitioner that the title of the Bimal Chandra Nandi over the offered land was defective; on query, it appears that Bimal Chandra Nandi have one full blooded sister, who have 50% share over the land purchased by the petitioner. At the time of execution of the deed Bimal Chandra Nandi never disclosed the fact to the petitioner in pursuance of the advice of some officers of IOCL he purchased 07 decimals of land from said Taralika Shit, vide 3 registered deed dated 13.03.2012. The said deeds executed by Taralika Shit was also produced with the office of IOCL. Thereafter the RGGLV distributorship was converted to Gramin Vitark by way of agreement entered into by IOCL and the petitioner dated 26th September 2016.
4. The IOCL served a show-cause upon the petitioner on 16.11.2016 alleging some irregularities detected in respect of purchase of land of 07 decimal from Taralika Shit and 04 decimal from another person. The present petitioner replied the said show cause on 05.12.2016 denying all allegation also denied the fact of misrepresentation.
5. Thereafter, the IOCL entered into a further agreement with the petitioner on 27th February 2017 for renewal of the said distributorship license for another 05 years.
6. Thereafter, IOCL again served a show cause upon the petitioner on 24th April 2018 asking the petitioner as to why his license should not be terminated due to the fact that on the last date of application of such distributorship dated 26.11.2010. he was not the owner over entire 14 decimals of land which proves the subsequent registered deed with Taralika Shit, dated 13.03.2012; which implies that the petitioner has given a false information regarding ownership of land as well as the undertaking dated 16.02.2012. The petitioner answered the show cause notice. After hearing the petitioner the IOCL has passed the impugned order dated 4 14.11.2018 by terminating the LPG distributorship license of the petitioner.
7. Hence this writ petition.
8. Learned Counsel, for the parties has argued both on the point of fact and law; and has filed written notes of argument. After hearing the parties the issues which are raised before this court are as follows:-
Firstly, whether the writ petitioner is maintainable.
Secondly, whether the order impugned passed by the IOCL arbitrary and illegal and required to be quashed.
9. i) Point of maintainability- Mr. Manabendra Singh Yadav, Learned Counsel, appearing on behalf of the IOCL submits that the agreement entered into by the petitioner and IOCL incorporated one clause of arbitration. The petitioner has every opportunity to refer the matter before the arbitrator as enumerated in Clause 37 of the said agreement. Without exhausting the said procedure, the petitioner cannot approached a writ court under Article 226 of the Constitution of India.
10. Mr. Kallol Basu, Learned Counsel, appearing on behalf of the petitioner submits that the petitioner has challenged the arbitrary action of respondent in terminating the license of the petitioner which is violation of a fundamental rights of the petitioner. He submits that the scope of judicial review of High Court under Article 226 of the Constitution of 5 India cannot be restrained when there is glaring instance of unreasonable arbitrary and perverse decision of the respondent authority. He further submits that by virtue of decision of this court in Prabir Kumar Baidy Vs. Union of India (2022) SCC Online CAL 4478 the issue has been specifically dealt with. Mr. Basu further argued that the observation of this court in Prabir Kr. Baidya (Supra) was upheld by the Hon'ble Supreme Court in an appeal preferred by the Oil Company.
11. Mr. Basu also cited decision of the Hon'ble Supreme Court in Gadrej Sara Lee Ltd. Vs. Excise and Taxation Officer-cum Assistant Authority (2023 SCC Online SC 95) wherein the Hon'ble Division Bench of the Supreme Court has discussed about the scope of judicial review of the High Court.
12. Heard the Learned Counsel. The Co-ordinate Bench of this Court in Prabir Kr. Baidya (Supra) has held that--
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 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 6 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 v. 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.
13. In Gadrej Sara Lee the Division Bench has held that
8. That apart, we may also usefully refer to the decisions of this Court reported in (1977) 2 SCC 724 (State of U. P. v. Indian Hume Pipe Co. Ltd.)** and (2000) 10 SCC 482 (Union of India v.
State of Haryana). What appears on a plain reading of the former decision is that whether a certain item falls within an entry in a sales tax statute, raises a pure question of law and if investigation into facts is unnecessary, the High Court could entertain a writ petition in its discretion even though the alternative remedy was not availed of; and, unless exercise of discretion is shown to be unreasonable or perverse, this Court would not interfere. In the latter decision, this court found the issue raised by the appellant to be pristinely legal requiring determination by the High Court without putting the appellant through the mill of statutory appeals in the hierarchy. What follows from the said decisions is that where the controversy is a purely legal one and it does not (2021) 93 GSTR 1 (SC).
(1977) 39 STC 355 (SC).
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involve disputed questions of fact but only questions of law, then it should be decided by the High Court instead of dismissing the writ petition on the ground of an alternative remedy being available.
14. From the above observation of Hon'ble Apex Court as well as the Co-ordinate Bench of this court it appears to me that the petitioner has challenged the termination of license by the respondent authority, in his view the act is illegal unreasonable arbitrary action. The writ court under Article 226 of the constitution of India has ample power to enter into the merit of any allegation against the said instrumentality of State where the injustice has alleged to have been caused. According to the observation of Hon'ble Apex Court in Prabir Kumar Baidya (2023) SCC Online Cal 1132, this court has ample opportunity and scope to entertain the writ petitioner. In my view writ petition is maintainable. Accordingly, this point decided in favour of the petitioner.
15. Point No. 2 Mr. Basu submits that the license of the petitioner was terminated for the ground that petitioner purportedly misrepresented and had given false information regarding the ownership of land in the application submitted by the petitioner at the time of entering into the agreement with IOCL.
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16. Mr Basu submits that the petitioner has purchased the land through a registered deed of sale dated 25.11.2012 from Bimal Chandra Nandy measuring 14 decimal.
17. Before the purchasing the said land he diligently searched the ownership of Bimal Chandra Nandi over the said plot of land from the local Pradhan of the Panchayet. The registered deed itself disclosed the declaration of Bimal Chandra Nandi regarding his title over the land measuring 14 decimals Mr. Basu further argued that the petitioner believed upon the declaration of Bimal Chandra Nandi and have purchased the entire property, though afterwards it appears that he had one full blooded sister namely Taralika Shit had ownership over 50% of the land. Mr. Basu Further argued that the entire fact was promptly intimated to the respondent company and according to their instruction, the petitioner purchased reset 07 decimals of land from sad Taralika Shit. Mr. Basu further argued that the petitioner himself is a victim of misrepresentation and fraud at the hands of Bimal Chandra Nandy. However, such defect was cured under the instruction of officers of IOCL. Mr. Basu further pointed out the provision of exception u/s 19 of Indian Contract Act regarding the cause of misrepresentation within the meaning of Section 17 of Indian Contract Act 1872. It is the further argument of Mr. Basu that since prior to entered into the agreement for RGGLV in the year 2012, the respondent corporation had conducted 9 field verification, the suitability of offered land and ownership of the petitioner was verified by the respondent corporation with ordinary diligent. On the basis of such field verification the petitioner appears to be fit and suitable person thus licence was issued in his favour, now by issuing the letter of termination the IOCL cannot plead misrepresentation.
18. Mr. Yadav Learned Counsel, argued that in the selection manual in Clause 4, common eligibility criteria for all categories has been laid down. Clause 4 (g) has enumerated-- candidate applying should own a suitable land minimum dimension to 20 Meter X 24 Meter at advertised RGGLV location for construction of LPG storage godown. To meet such requirements the petitioner cited the sale deed dated 24.11.2010 claiming thereby he owns a plot of land having dimensions of 26 Meter X 22.8 Meter in plot No. 876. The sale deed dated 24.11.2010 mentioned he has purchased 14 decimals in plot No. 876. At the end of said form there is undertaking of the applicant wherein it has been mentioned--
"on verification of the Oil Corporation if it is found that the information given by the applicant is incorrect/false/misrepresented then, his candidature will be stand cancelled."
19. Mr. Yadav further argued that one Smt. Aparna Mandal, lodged a complaint wherein she alleged that the vendor of petitioner had only 07 decimal of land and it has 10 been alleged that the petitioner has misrepresented the IOCL to get the license. Mr. Yadav also argued that the said Bimal Chandra Nandy also lodged a complaint with the BL&LRO stating inter alia that writ petitioner manipulated the deed in respect of 14 decimal. Mr. Yadav argued that on the basis of such complaint and preliminary inquiry and show cause notice dated 16.11.2016 was served upon the petitioner and the petitioner replied the said show cause notice, wherein admitted the position. On receiving such reply, it was not found satisfactory thus, the IOCL serve a show cause notice for termination. The notice was under challenge before this court but this court did not entertain the petitioner and directed the respondent to take decision. The petitioner was given a personal hearing and thereafter his license was terminated by passing a reason order. Mr. Yadav further argued that writ petitioner was not at all eligible candidate on the last date of application and failed to satisfied the mandatory criterias. He also signed the declaration in his application thus the termination of his distributorship is lawful and valid.
20. Heard the Learned Counsel. Perused the impugned order of termination in the show cause notice for termination letter dated 24.04.2018. The authority concern has mentioned two (2) clauses which was alleged to have been violated by the petitioner they are clause 20 of the Manuals and clause 27(1) of the distributorship agreement.
11They are set out as follows:-
Clause 20 of the Manual for selection of RGGLV (2009)- If any information furnished by the applicant is found to be false at any point of time before or after appointment as RGGLV, the allotment shall be cancelled forthwith and RGGLV terminated in case commissioned.
Clause 27(1) of the distributorship agreement- if any information given by the distributer in his application for appointment as a Distributor shall be found to be untrue or incorrect in any material particular, the Corporation shall be at liberty at its entire discretion to terminate the Agreement forthwith.
21. The ground of termination in impugned letter dated 14.11.2018 is enumerated as follows:-
The above implies that you have given false information regarding ownership of land in your application and undertaking dated 16. 5.02.2012. The same amounts to misrepresentation and is a ground for termination as per provisions of Clause 20 of the Manual for selection of RGGLV (2009) and the distributorship agreement dated 27.02.2017 So, in the order of termination, it has been mentioned that there are a violation of Clause 20 of the Manual by the petitioner by declaring the fact that he is the owner of 14 decimal of land. It has been alleged by the authority that the act of the petitioner is unlawful and fraudulent. It is also the ground of termination that such act of the petitioner amounts to misrepresentation.12
The misrepresentation has been defined u/s 18 of the Indian Contract Act as follows:-
"Misrepresentation" defined. -- "Misrepresentation" means includes-
(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.
22. Let me consider whether the term used as misrepresentation in the letter of termination whether actually come under the purview of the definition u/s 18 of Contract Act. section 18(1) and Section 18(2) does not come under the purview of the alleged act of the petitioner. Section 18(3) of the Contract Act enumerated "mistake about subject matter causing, however innocently, a party to an agreement to make mistake as to substance of thing which is the subject of the agreement"-- is also misrepresentation.
23. Let me consider whether the conduct of the present petitioner is come under the purview of misrepresentation. The petitioner purchased a land measuring 14 decimal. The deed itself declared the version of vendor namely Bimal Chandra 13 Nandi, regarding the fact that he is the owner of 14 decimal of land. It is further fact that after such purchase the name of the petitioner was entered into the record of right by the office of the concern BL&LRO. Before entering the name of petition in the record of right, the authority concern (BLSLRO) is duty bound, not only to act upon the deed itself, but also to cause an enquiry regarding the alienable right of the erstwhile owner (Bimal Chandra Nandi). The petitioner placed the deed with the respondent, the respondent has made a filed verification after the petitioner was successful in draw of lot. The concern officer visited the spot and they are generally experienced to verify the ownership and particulars of the land so offer as construction of show room/godown. After the enquiry, the team of IOCL certified regarding the suitability of the candidature of petitioner; the IOCL must have acted not only upon the declaration of Petitioner but also upon the report of the officers. It is true after the license was granted it appears to the petitioner as well as the respondent authority that the ownership was defective; but for that reason the petitioner only cannot be held liable. Thus the mistake was held by both the petitioner as well respondent/IOCL before entering into the agreement. The definition of mistake and its effect upon a contract has been specifically dealt with in the Contract Act in Section 20, 21, 22.
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20. Agreement void where both parties are under mistake as to matter of fact. -
Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.
Explanation.-- An erroneous opinion as to the value of the thing which forms the subject- matter of the agreement, is not to be deemed a mistake as to a matter of fact.
21. Effect of mistakes as to law. - A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact.
22. Contract caused by mistake of one party as to matter of fact. - A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.
In dealing with true nature of misrepresentation, it is necessary that misrepresentation must be caused to induce other party to gain an advantage, in the sense that but for the misrepresentation the consent would not have been given.
Section 19 of Indian Contract Act 1872 enumerates the provision of voidability of agreements. Let us consider whether in this case respondent authority actually had any option to declare the agreement be void.
Section 19-- Voidability of agreements without free consent. When consent to an agreement is caused by coercion. 1 fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. 15
A party to a contract whose consent was caused by fraud or misrepresentation, may. if he thinks fit. insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.
Exception. If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17. the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.
Explanation.-- A fraud ог misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.
24. So it is true that the agreement is not voidable if the party whose consent was so caused at the means of discovering the truth with ordinary diligence.
25. The misrepresentation must be made with the intention that it shall be acted by the other party. It has not proved that the petitioner ever had tried to induce the IOCL to enter into the contract. In the present case the respondent authority during the course of pre
-contractual negotiation had enquired the suitability of the candidature of the petitioner. The respondent authority had a special knowledge and expertise concerning subject matter of the negotiations, and should have made specific report with the intention that the candidate is suitable. They have must ended in the finding that petitioner is fit to enter into a contract. Every person who forms 16 an advice information and opinion of this kind, is under a duty of reasonable care to see that it is true, this duty is not limited to person carrying profession of business of giving advice but it is legally binding upon parties to contracts. It must be borne in mind that there is often a gap of time between the representation of fact and the ultimate conclusion of the agreement. Any change to circumstances in the mean time affecting the fact represented, must be brought to the knowledge to the other party. In this case it is a difficult question about the matter that where a person has means of discovering the truth, but does not use that; an agreement in reliance upon the statement made to respondent by its designated enquiry team, reasons thereby, such agreement is not at all voidable.
26. Under the above observation in my view the respondent authority concern can not blame the petitioner himself for the placing of land having disputed title at the time of entering into the agreement with the respondent No. 1. However after such information has been received by the respondent, the respondent cannot enter into an a fresh agreement with the petitioner. The conduct of the respondent itself proves that they are not in position to repudiate the agreement but they actually allowed the petitioner to carry the business. Thus, at the initial stage though it appears that the representation of petitioner regarding his title over the land in question was imperfect which was, perfected later on. Hence the respondent authority allowed the petitioner to continue such business by renewing the agreement for further period of 05 years. The act of the respondent authority after 17 such knowledge imperfect title of the petitioner itself stopped them to declare the agreement invalid.
27. Moreover the petitioner is performing the business in unblemished manner which is the only means of his livelihood. Admittedly, the alleged misrepresentation by the present petitioner is not tenable in the eye of law. Thus he cannot be deprived of his smooth livelihood by terminating his license.
28. Under the above observation I am of a view that the impugned order of a termination passed by the respondent authority is unsustainable. Hence the same is quashed.
29. Thus, this issue decided in favour of the petitioner.
30. The instant writ petition is disposed of. The respondent authority is directed to allow the petitioner to continue with the license by making a specific order within a period of 08 weeks from date.
31. Under the above observations the writ petition is disposed of.
32. Parties to act upon the server copy and urgent certified copy of the judgment be received from the concerned Dept. on usual terms and conditions.
(Subhendu Samanta, J.)