IN THE HIGH COURT AT CALCUTTA
CHITTA RANJAN DASH, PARTHA SARATHI SEN, JJ.
Indian Oil Corporation Limited & Ors. – Appellants
Versus
Madhududan Majilya & Anr. – Respondents
F.M.A. 1108 of 2018 With MAT 1372 of 2017
Decided on : 03-04-2023
Constitution of India,1950 – Notice of termination of dealership - Distributorship - Held, no materials have been placed either before the Writ Court or before this Court that the Oil Company and/or its officers had acquiesced to the wrong doing of the said distributor rather it appears that as soon as it has come to the knowledge of the Oil Company from the letter of complaint of the District Magistrate, Hooghly that the said distributor has submitted a false affidavit and a false undertaking violating the terms of the agreement, the Oil Company was prompt enough to enquire into the matter and thereafter proceeded in accordance with law in issuing the show cause notice and after obtaining its reply, issued the notice of termination which had been assailed before the Hon’ble Single Bench. We thus find that that there was no element of acquiescence or active or passive consent on the part of the Oil Company and/or its officers to the wrong doing of the distributor as wrongly alleged by the said distributor - Appeals Disposed of.
JUDGMENT :
PARTHA SARATHI SEN, J.
1. In these two intra Court appeals the order dated 10.04.2017 as passed in WP 23810(W) of 2007 by the Hon’ble Single Bench has been assailed. Since both the appeals have been preferred against a common judgement and since the facts and laws involved in these two appeals are identical, we propose to dispose of these two appeals by a common judgement.
2. Before the Hon’ble Single Bench the aforementioned writ petition was filed challenging the notice of termination dated 25.08.2006 as issued by the Indian Oil Corporation Ltd.(hereinafter referred to as the ‘Oil Company’, in short) in favour of Madhusudan Majilya being the proprietor of M/S Tarkeswar Gas Service (the respondent in FMA 1108/2008 and the appellant in MAT 1372/2017)(hereinafter referred to as ‘the Distributor’) whereby and whereunder the said Oil Company terminated the distributorship agreement dated 14.03.1989 as entered by and between them and at the same time also terminated the appointment of the said distributor with immediate effect.
3. The Hon’ble Single Bench while disposing the writ petition by the impugned order expressed the view that the Oil Company had waived their right of termination of distributorship and thus permitted the writ petitioner to participate in the tender process as would be issued by the Oil Company after the expiration of the tenure of five years of the new distributor who took the said distributorship subject to the result of the said writ petition.
4. The Oil Company felt aggrieved and thus preferred FMA No. 1108 of 2018. The writ petitioner was equally not satisfied with the impugned order since his prayer for restoration of his distributorship was not considered favourably by the Hon’ble Single Bench and thus the said distributor also preferred the appeal being MAT 1372 of 2017.
5. At the time of hearing of these two appeals Ms. Meharia, learned advocate appearing for the Oil Company at the very outset draws attention of this court to the list of dates as handed over by her to us. Attention of this Court is also drawn to page nos. 94 to 97 of the stay petition being CAN 6844 of 2017 as filed in FMA 1108 of 2018. It is contended on behalf of the Oil Company that from the letter dated 13.05.1988 as issued by the Oil Company in favour of the distributor it would reveal that the Oil Company had made the said distributor aware that he is duty bound to operate the distributorship personally on full time basis and that he had to give an undertaking to the Oil Company to that effect. It is submitted that in the said letter dated 13.05.1988, it has also been communicated to the distributor that in the event he is employed anywhere he has to submit his acceptance of resignation letter from his employer prior to issuance of the letter of appointment of distributorship in favour of him. In course of her submission Ms. Meharia, learned advocate for the Oil Company also draws our attention to the Annexure R3 being the copy of the agreement dated 14.03.1989 as executed by and between the Oil Company and the distributor. Attention of this court is also drawn to Clause 23(b), Clause 23C (ii) and Clause 28 of the said agreement. For effective adjudication of the instant appeal, we propose to quote the aforementioned three clauses of the agreement dated 14.03.1989 in verbatim and those are as under:
(b) it shall be a paramount condition of the agreement that the Distributor himself (if he be an individual) or both the partners of the distributor’s firm (if the Distributor is a partnership firm consisting of two partners only) or the majority of the partners of the Distributor’s firm ( if the Distributor is a firm consisting of more than two partners) or the majority of the office Bearers /Elected Members of the Distributors Co-operative Society( if the Distributor is a Cooperative Society) Managing/Wholetime or Elected Directors (if the Distributor is a private limited company) as the case m
Associated Hotels of India Ltd. vs. S.B Sardar Ranjit Singh (AIR 1968 SC 933);
Union of India and Others vs. N.Murugesan and Others [(2022) 2 SCC 25)];
Kastha Niwarak Grahnirman Sahakari Sanstha Maryadit, Indore vs. President
Moumita Poddar vs. IOC reported in (2010) 9 SCC 291
Sneh Prabha and Ors. Vs. State of U.P and Ors. [(1996) 7 SCC 426];
Kerala State Electricity Board vs. Saratchandran P. and Ors. [(2008) 9 SCC 396].
The court emphasized that termination of business agreements requires adherence to principles of natural justice, including the right to a personal hearing, and that mere allegations without substant....
The court established that termination of a distributorship must adhere to due process and contractual obligations, emphasizing the need for prior consent in partnership arrangements.
Natural justice principles mandate that parties should be afforded opportunity to explain before termination; disputes under contracts with arbitration clauses should not be resolved in writ petition....
The distributorship agreement was terminable and had expired by efflux of time. The appellant's attempt to enforce the agreement was not tenable. The Court found no error in the decisions of the Arbi....
There is no rule in the Corporation which allows renewal of terminated Distributorship on sympathetic grounds, especially in cases where Distributorship has been terminated on account of malpractices....
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