2023 Supreme(Cal) 882

IN THE HIGH COURT AT CALCUTTA
Partha Sarathi Chatterjee, J.
Saumajit Roy Chowdhury – Petitioner
Versus
Indian Oil Corporation Ltd. & Ors. – Respondents
WPA 7674 of 2023
Decided On : 07-08-2023

The termination of a dealership agreement must be fair and in accordance with the principles of natural justice. The burden of proving unauthorized purchase lies on the party alleging it.

Headnote:

INDIAN OIL CORPORATION LTD. V. PARTHA SARATHI CHATTERJEE - DEALERSHIP TERMINATION - MDG GUIDELINES - ARBITRARY ACTION - NATURAL JUSTICE: The High Court held that the termination of the petitioner's retail outlet dealership was arbitrary and violative of the principles of natural justice. The Court found that the respondents had proceeded in a preconceived mind and had failed to give the petitioner a fair opportunity to defend himself against the allegations of unauthorized purchase.

Fact of the Case:

The petitioner was appointed as an Indian Oil Retail Outlet Dealer (B-site) under the Open Category at Village- Bahiri, P.S.-Bolpur, District- Birbhum. On 24.9.2022, some officials of the IOCL inspected the petitioner’s outlet and the samples of Motor Spirit (MS) and High Speed Diesel (HSD) were drawn and sent to the laboratory for testing. On the same day, by a letter dated 24.9.2002, the Business Manager, COCO-Rampurhat, IOCL. (MD), Durgapur Divisional Office informed the petitioner that during inspection, some irregularities were detected. The petitioner submitted his explanation by a letter dated 1.10.2022 dealing with all the irregularities referred in the letter dated 24.09.2022. On 8.10.2022, the test report of the samples of MS and HSD was handed over to the petitioner. The report revealed that samples passed the required specification and no adulteration was found. On 25.11.2022, a show cause notice was issued asking the petitioner to show cause, within 10 days from the date of issue of that letter, as to why action should not be taken as per Clauses 8.2(vi) of the amended MDG 2012 as in vogue and clause 3, 29, 30, 34, 39(a) and 42 of the dealership agreement.

Finding of the Court:

The Court found that the respondents had failed to prove that there was unauthorized purchase by the petitioner. The Court also found that the respondents had not given the petitioner a fair opportunity to defend himself against the allegations. The Court held that the respondents had acted in a preconceived mind and had violated the principles of natural justice.

Issues: 1. Whether the termination of the petitioner's retail outlet dealership was arbitrary and violative of the principles of natural justice? 2. Whether the respondents had proved that there was unauthorized purchase by the petitioner? 3. Whether the respondents had given the petitioner a fair opportunity to defend himself against the allegations?

Ratio Decidendi: 1. The Court held that the termination of the petitioner's retail outlet dealership was arbitrary and violative of the principles of natural justice as the respondents had proceeded in a preconceived mind and had failed to give the petitioner a fair opportunity to defend himself against the allegations of unauthorized purchase. 2. The Court held that the respondents had failed to prove that there was unauthorized purchase by the petitioner. 3. The Court held that the respondents had not given the petitioner a fair opportunity to defend himself against the allegations.

Final Decision: The Court allowed the writ petition and set aside the show cause notice dated 25.11.2022 and the order of termination dated 24.2.2023. The respondents were directed to resume supply of MS, HSD and other products, if any, to the petitioner’s retail outlet namely, M/s. Krit Filling Station within 4(four) weeks from the date.