The central legal point established in the judgment is the requirement of providing a reasonable opportunity of being heard before the termination of a contract agreement and the gross violation of the principles of natural justice.

B.K. Sharma, J.

1. The challenge in the writ petition is the order dated 16.10.2006 (Annexure-VII to the writ petition) by which the petitioner's dealership of retail petroleum product has been terminated.

2. The Memorandum of Agreement dated 19.11.1997 was entered into by and between the petitioner and the respondent-Corporation in respect of appointment of the petitioner as a dealer for the retail sale of petroleum products in the scheduled premises. The agreement contains the terms and conditions of the dealership. Even prior to me agreement, the father of the petitioner was running the business of selling petroleum product since 1962 from the same premises. After his demise, accepting the verbal request of the petitioner, he was appointed as the dealer by letter dated 25.7.1996 and thereafter, the agreement dated 19.11.1997 was executed by and between the parties.

3. According to the petitioner, in the place in which the dealership of the petitioner is located, there is only one petrol and diesel pump belonging to the petitioner and there is increase of demand for petrol. It has been stated in Paragraph 8 of the writ petition that the Government officials including the Deputy Commissioner and the Superintendent of Police purchase petrol from the petitioner's service station on credit basis due to non-availability of fund with them. Because of such credit system and non-payment of payment in time, the petitioner has to suffer from great financial hardship.

4. It has been stated in the writ petition that the functioning of the outlet remains open for check by the authorities and as per the practice, the officials of the Weights and Measures Department put seal on the outlet to ensure that no foreign substance is added from outside. Besides, the checks are also carried out by the respondent-Corporation through its officials. On 6.5.2006, 13.6.2006, 15.7.2006 and 25.7.2006, the dispensing pump (diesel) was checked by the Inspector of Legal Metrology with 5 litre check measure and delivery was found correct within the limit of tolerance. The petitioner has annexed endorsement of the Inspector in the Inspection Book as Annexure-III to the writ petition.

5. The Respondent No. 2 by his Annexure-4 communication dated 28.7.2006 informed the petitioner that there was tampering of weight and measure seal of HSD (High Spirit Diesel) dispensing unit. It was also alleged that free air facility was not available and the M.S. (Motor Spirit) product was found dry on certain days and that HSD product was also found dry on certain days. The letter dated 28.7.2006 was issued to the petitioner on the basis of the purported surprise inspection report submitted by the Executive Sales Officer of the Respondent No. 2. The petitioner was asked to furnish his explanation so as to reach the authority on or before 10.8.2006. On receipt of the communication, enclosing therewith the inspection report dated 26.7.2006, the petitioner submitted his explanation on 9.8.2006 denying the allegations made against him.

6. After the aforesaid communication and the explanation furnished by the petitioner, the dealership agreement has been terminated by the impugned order dated 16.10.2006 (Annexure-VII to the writ petition). The dealership has been terminated in reference to Clauses 8, 9 and 55 (A)m 55 (I) and 55 (K) of the Dealership Agreement. It has been stated in the impugned order that the explanation furnished by the petitioner was not satisfactory and attributing irregularities, malpractice and violation of various clauses of the Dealership Agreement, it has been cancelled by the impugned order.

7. The respondents have filed their counter-affidavit. In paragraph 8 of the affidavit, the letter dated 28.7.2006 (Annexure-IV) by which the petitioner was asked to furnish explanation, has been described as the show cause notice. In paragraph 10, it has been stated that the termination of dealership is justified as the petitioner has committed major offence like ta