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High Court of Judicature at Calcutta
TAPEN SEN, J.
M/s. Niwas Ramgopal & Others
Versus
The Director of Consumer Goods & Others
W.P. No. 758 of 2010 With G.A. No. 2914 of 2010
Decided On : 03-07-2012
PARTNERSHIP ACT - PARTNERSHIP DEED - RECONSTITUTION - INDIAN OIL CORPORATION LTD. POLICY GUIDELINES - VALIDITY - Clause 1.5 of the Policy Guidelines dated 1.12.2008 issued by Indian Oil Corporation Ltd., which mandates reconstitution of a partnership firm in the event of the death of one of the partners with the legal heirs and the surviving partners, is contrary to the provisions of the Indian Partnership Act, 1932.
Fact of the Case:
A partnership firm, M/s. Shree Niwas Ramgopal, consisting of two surviving partners and the deceased partner's legal heirs, sought renewal of their kerosene dealership license under the West Bengal Kerosene Control Order, 1968. The Indian Oil Corporation Ltd. refused to renew the license, citing their Policy Guidelines that required reconstitution of the partnership with the legal heirs. The petitioners challenged the validity of this clause, arguing that it violated the provisions of the Indian Partnership Act.
Finding of the Court:
The court held that Clause 1.5 of the Policy Guidelines was contrary to the provisions of the Indian Partnership Act, 1932. The court found that the Partnership Deed of the petitioners' firm clearly stated that the death of any partner would not cause the discontinuance of the partnership, and that the surviving partners could continue the business and admit any of the competent heirs of the deceased to the partnership on mutually agreed terms and conditions.
Issues: 1. Whether Clause 1.5 of the Policy Guidelines issued by Indian Oil Corporation Ltd. is valid in light of the provisions of the Indian Partnership Act, 1932? 2. Whether the Indian Oil Corporation Ltd. can refuse to renew the petitioners' kerosene dealership license based on the said Policy Guidelines?
Ratio Decidendi: 1. The court held that the Indian Partnership Act, 1932 governs the formation, operation, and dissolution of partnerships in India, and that any provision in the Policy Guidelines that is inconsistent with the Act is void. 2. The court found that Clause 1.5 of the Policy Guidelines, which mandates reconstitution of a partnership firm in the event of the death of one of the partners with the legal heirs and the surviving partners, is inconsistent with the provisions of the Act, which allows the surviving partners to continue the business and admit any of the competent heirs of the deceased to the partnership on mutually agreed terms and conditions.
Final Decision: The court allowed the writ petition, holding that the Indian Oil Corporation Ltd. cannot refuse to renew the petitioners' kerosene dealership license issued under the 1968 Control Order nor can they refuse to allow the reconstitution of the Partnership Firm of the Petitioner No. 1 at this stage.
Tapen Sen, J.
1. In this Writ Petition, the Petitioners pray for a Declaration declaring that Clause 1.5 of the Policy Guidelines dated 1.12.2008 (page 87 of the Writ Petition) be declared to be contrary to the provisions of the Indian Partnership Act, 1932 (hereinafter referred to as the 1932 Act)
The Petitioners further pray for the issuance of a writ of mandamus Directing the Respondent Nos. 1 and 2 to renew the licence of the Petitioner No. 1 under the West Bengal Kerosene Control Order 1968.
They further pray that the Respondent Nos. 4 to 7 be Directed to allow the reconstitution of the Firm (Petitioner NO. 1) in terms of the Partnership Deed dated 24.11.1989 (Annexure-P/1).
The Petitioners further pray that the Respondents be Directed to extend the validity of the Token which was issued against their Application for renewal of the licence. They have also prayed that these Respondents be restrained from refusing to supply Kerosene Oil after 14th June, 2010 and allow them to continue with their business till reconstitution of the Firm.
2. The facts of this case are that the Petitioner No. 1 (M/s. Shree Niwas Ramgopal) was a Partnership firm of one Kanhaiyalal Santhalia (now deceased) and it was engaged in the business of Kerosene. It was appointed as a Dealer by M/s. Indian Oil Corporation Ltd. Subsequently, Kanhaiyalal Santhalia inducted the Petitioner Nos. 2 and 3 (Gobind Santhalia and Ramesh Santhalia) as partners on the basis of a Partnership Deed dated 24.11.1989 which was approved by the oil Company by its letter dated 8.6.1990.
3. It is stated that the partners of the Petitioner No. 1 entered into an Agreement with M/s. Indian Oil Corporation Ltd. for dealing with the business of Kerosene Dealershipin Dhulian, Murshidabad, West Bengal vide Annexure-P/2. They obtained necessary licences including licence No. AGT/Jangi/190 under the West Bengal Kerosene Control Order, 1968 (Anenxure-P/3).
4. The said licence expires on the 31st day of December each year and before its expiry, an Application in Form-C is required to be made. The Petitioners got their licence renewed each year till 31st December, 2009. However before the expiry of the licence in December 2009, the Petitioners also filed an Application for renewal for the year 2010. However, before the licence could be renewed for 2010, the father of the Petitioner Nos. 2 and 3 died on 29.11.2009. Information was given to the Respondents by two separate letters both of which were dated 30.11.2009 (Annexure-P/4) collectively.
5. It is stated that upon receipt of a letter, the Respondent No. 2 (Joint Director, Consumer goods) informed the Petitioner No. 1, by his letter dated 7.12.2009, that the Respondent No. 1 (Director of Consumer Goods) had allowed the functioning of the business till 31st March, 2010. This letter of the Respondent No. 2 has been brought on record vide Annexure -P/5.
6. It has been stated that upon the death of one of the partners, the Agreement between Indian Oil Corporation Ltd. was required to be executed afresh. However, till execution of a fresh Agreement , and as advised by the Chief Divisional Retail Sales Manager (Respondent No. 5), a Bond by the surviving partners was submitted by forwarding letter dated 15.12.2009 and after acceptance of the said Indemnity Bond, the Respondent No. 4 (Indian Oil Corporation Ltd.) allowed the Petitioner No. 1 (the Partnership firm) to continue to function with the surviving partners. Annexure P/6 is the letter sent by the Petitioners to the Chief Divisional Retail Sales Manager on 15.12.2009. It is stated that on 16.12.2009, the Petitioner No. 2 was handed over a Token dated 16.12.2009 for carrying on the business till 31st March, 2009 and the Petitioners were directed to submit a new Dealership Agreement as well as a new Partnership Deed. It is stated that the validity of the Token was subsequently extended till 14.6.2010.
7. On 16th January, 2010 (Annexure-P/8), the Petitioner Nos. 2 and 3 wrote a
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