2010 Supreme(SC) 182

2010 (2) Supreme
SUPREME COURT OF INDIA
Altamas Kabir and Cyriac Joseph, JJ.
M/s Hindustan Petroleum Corpn. Ltd. & Ors. — Petitioners
versus
M/s Super Highway Services & Anr. — Respondents
Special Leave Petition (civil) No.104 of 2009
Decided on : 19-02-2010

IMPORTANT POINT
The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly. In order to justify the action taken to terminate such an agreement, the concerned authority has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose.

Headnote:Special Leave Petition - Petitioner Corporation entered into an Agreement with the Respondent No.1 for the retail sale or supply of petrol, diesel, motor oils, grease and such other products- Termination of Dealership Agreement of Respondent No.1 under Clause 58(1) of said Agreement by Petitioner Corporation-Challenge thereagainst- The cancellation of dealership agreement of a party is a serious business and cannot be taken lightly- In order to justify the action taken to terminate such an agreement, the concerned authority has to act fairly and in complete adherence to the rules/guidelines framed for the said purpose- The non-service of notice to aggrieved person before termination of his dealership agreement offends the well-established principle that no person should be condemned unheard- It was the duty of petitioner to ensure that Respondent No.1 was given a hearing or at least serious attempts were made to serve him with notice of proceedings before terminating his agreement-High Court did not commit any error in allowing writ petition filed by Respondent No.1 , upon holding that notice of the Laboratory Test to be conducted at the Barauni Terminal had not been served upon Respondent No.1, which had caused severe prejudice to the said respondent since its dealership agreement was terminated on the basis of findings of such Test- Admittedly dealership agreement was terminated on ground that product supplied by petitioner corporation was contaminated by respondent-Such contamination was sought to be proved by testing the T.T. retention sample in the laboratory at Barauni Terminal-No admissible evidence to prove service of notice on respondent or refusal of notice by respondent- Further, the notice dated 28.05.2008 which was allegedly refused by respondent, did not give him adequate time to arrange for the presence of himself or his representative during the test to be conducted at 3.00 PM on 29.05.2008-Thus,termination of dealership agreement of respondent was arbitrary, illegal and in violation of principles of natural justice- Although, Clause 68 of the Dealership Agreement referred to arbitration, it was unfortunate that said question was not raised before High Court-It was now too late in the day for the petitioner Corporation to contend that in view of Clause 68 of Dealership Agreement, Respondent No.1 was not entitled to seek its remedy before writ Court- In any event, by filing appeal against order of Single Judge, Petitioner also submitted to the jurisdiction of writ Court, without objecting to the same- Special Leave Petition, dismissed. (Paras 17 to 20)

       Facts of the Case :

        Issue in consideration in present Special Leave Petition was as to whether the dealership of the Respondent No.1 had been validly terminated in accordance with Clause 58 of the Dealership Agreement.

       Findings of the Court :

        It was the duty of petitioner to ensure that Respondent No.1 was given a hearing or at least serious attempts were made to serve him with notice of proceedings before terminating his agreement.High Court did not commit any error in allowing writ petition filed by Respondent No.1 , upon holding that notice of the Laboratory Test to be conducted at the Barauni Terminal had not been served upon Respondent No.1, which had caused severe prejudice to the said respondent since its dealership agreement was terminated on the basis of findings of such Test. Admittedly dealership agreement was terminated on ground that product supplied by petitioner corporation was contaminated by respondent.Such contamination was sought to be proved by testing the T.T. retention sample in the laboratory at Barauni Terminal. No admissible evidence was there to prove service of notice on respondent or refusal of notice by respondent. Further, the notice dated 28.05.2008 which was allegedly refused by respondent, did not give him adequate time to arrange for the presence of himself or his representative during the test to be conducted at 3.00 PM on 29.05.2008.Thus,termination of dealership agreement of respondent was arbitrary, illegal and in violation of principles of natural justice. Although, Clause 68 of the Dealership Agreement referred to arbitration, it was unfortunate that said question was not raised before High Court.It was now too late in the day for the petitioner Corporation to contend that in view of Clause 68 of Dealership Agreement, Respondent No.1 was not entitled to seek its remedy before writ Court.In any event, by filing appeal against order of Single Judge, Petitioner also submitted to the jurisdiction of writ Court, without objecting to the same. Special Leave Petition, held liable to be dismissed.

       Result : Special Leave Petition dismissed.